Do not invest money in a live forex account without first practicing on a Forex demo account. Take at least 2-3 months to practice on a demo platform.
Let your profits run
When the market moves in your favour, you can remove your stop loss and let your profits run. It can be difficult or even impossible to execute orders during times of extreme volatility.
Keep your position sizes within your limitations
In order to make profit, you need to know that to be successful you have to go for the long term trade. Also, like a successful trader you should know that it is not good to put considerable capital in peril. It is hard to find prosperous traders to risk more than 10% of their account in any trade they make.
Know your risk vs. reward ratio
The minimum ratio you should be using is 1:2, and if you are successful on 50% of your trades then you are doing very well. For instance, if you are long on GBP/USD and you would like to gain 60 pips, you should never risk more than 30 pips. If you do, you are more likely to be unsuccessful.
To trade successfully you have to have in mind that the risk vs. reward analysis is extremely important.
Have adequate capital
You always need to make sure that you have enough credit, and never trade money that you cannot afford to lose. Mental independence is a key to successful trading. You must not be influenced by your fear of losing. For example if you were to lose 50% of your opening balance within six months, you should ask yourself whether you can afford to continue trading, and only do so if you can.
Trending or neutral
You need to know the market – if it is trending or neutral. In a trending market, you simply follow the trend. In a neutral market though, you have to buy on lows and sell on highs. You can control your risk by using the stop-losses.
Go with the trend
Going with the trend you maximize your profit chances. To trade against it, will require much more attention, sharp skills and definitely steady nerves to reach your trading goals.
Choose the appropriate time frame for you
If you choose the right time frame for you, you will be comfortable and you will have enough time to analyze the market and to place and close your orders. There are people that like action, so they choose the smaller time frames. For others, 10-15 minute time frames leave them unable to make the right decision.
Always try to look at a larger time frame than the one you have already chosen to trade with.
This will help you to define the trend. For instance, when you trade with the 30 minute time frame, you should also have a look at the 4 hour charts.
Exactly in the same way, if you are trading the 1 hour chart, it would be good to look at the daily or weekly price movements.
If it is hard to spot a trade, just choose a bigger time frame. The up and down market patterns will always be present. You need to know the dominant trade, but, if you are a scalper, then you do not need to waste your time studying the large trends.
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Averaging
Continuing to add to a losing position is one of the most common mistakes traders make. Averaging will be the death of short-term trades.
Preserving your capital is the most important thing for short-term trades. By putting too much of your capital at risk you will threaten your own success. In short-term trading the market should move in the correct direction within a relatively short period of time if a strategy is correct. In case it is wrong, traders should realise that they did not trade correctly and should accept the loss and try to move on. It is better never to add to a losing position.
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