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FOREX
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TIP 1 Read both the books by
Mark Douglas which cover trading psychology BEFORE you read or do
anything else. If you don’t, I’ll say I told you so when you hit a
failure barrier and don’t know why.
TIP 2
Stop loss policy - you MUST have one and practice, more practice and
even more practice at sticking to it. It will not be easy but it is an
essential discipline to profitable trading.
TIP 3 Trading plan / system.
Again, you MUST have one! Then you must practice sticking to it. Do
not try and second guess or trade against your indicators - wait
until they give you a concise signal before acting on it.
TIP 4
TRADE WITH
THE TREND. DO NOT trade against the hourly trend of the market
unless you are VERY certain the market has turned. Check this by
watching a long term moving average (say 80 SMA on 15 minute
chart)
TIP 5 Learn to sit on your
hands and not trade! It’s better to wait for good quality trades
than take a mediocre one and loose money. A day of no trades is
better than a day with one loosing one. If you don’t like the
market, just walk away. It will always be there later.
TIP 6 Don’t
set yourself false targets and expectations. Trading is not an EXACT
science and if you do you will only become frustrated by your failure to
meet them. Take what the market gives and be satisfied. Greed will kill
you as a trader, both mentally and monetarily.
TIP 7 The market is rarely
your friend in a trade that goes against you. Cut your losses
quickly and accept them as an inherent part of trading. You will not
be able to trade without some loosing positions. Manage them well!
TIP 8 Try hard not to get out
of profitable trades too early. Try operating a trailing stoploss of
say 15 to 20 pips behind the trade (on 5 minute timeframe) and
maximise your good trades by letting them run. Be
patient!
TIP 9 Ensure you fully
understand how to generate and use pivot points and camarilla points
on your trading platform. These are crucial decision points for
daily trading and you will struggle without them.
TIP 10
DO NOT overtrade
your account. Read up on money management in trading to make sure
you fully understand why this is important and develop a strategy
which fits with your personal trading capital. NEVER risk wiping out
your account because believe me, it can happen. I’ve done it twice
myself!
TIP 11
Learn about
FIBONACCI levels and how to apply them to your charts.
TIP 12
Keep your trading
system simple. Do not have too much information on your trading
screen. It is unnecessary and will only cause you to be confused and
delay you making your trading decisions.
TIP 13
Always think in
terms of probabilities. Trading is all about thinking in
probabilities NOT certainties. You can make all the “right”
decisions and the trade still goes against you. This does not make
it a “wrong” trade, just one of the many trades you will take which,
through probability, are on the “loosing” side of your trading plan.
Don’t expect not to have negative trades - they are a necessary part
of the plan and cannot be avoided.
TIP 14
Ensure that the
candle is fully formed on the timeframe you are trading BEFORE you
enter your trade. Trade what you see, not what you would like to
see.
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