ADVICE FOR TRADERS
*The advice and recommendations below are the opinion of VAM FOREX and come from decades of brokerage and trading experience. We hope it will be of benefit to you and help you to become a better forex trader.
Sufficient risk capital is absolutely necessary to properly trade forex markets. The loss of some or all of your forex trading funds should neither affect your lifestyle in any way nor ruin your morale. Mistakes and losses can and will happen when trading, and the sooner you learn to accept losses as inevitable the better trader you will become.
We recommend new traders practice on a FREE Demo Account prior to opening a live account, but try to think of your forex demo account as a real forex trading account with real funds, and trade as is you were trading your real forex trading account. This can make the transition to a live forex account somewhat easier.
We also advise clients to focus on trading only a few currencies. It is much easier to learn about and track the behavior characteristics and patterns of a few different currencies rather than many.
Common trading mistakes.....and how to avoid them
(1) Don't necessarily follow the crowd. Often, by the time "the crowd" has reacted, the price move is almost over.
(2) If the market moves a little against your position, try to avoid the temptation of quickly reversing the position or doubling up your position to "get back" a loss. Sometimes reversing a position or adding to a position may be the right move, however, we simply suggest that such a move should be made based on proper analysis rather than because you let your emotions get in the way of sound judgment.
(3) Be decisive when "pulling the trigger" on a trade. If you are confident in your forex trading strategy, you should not be overly cautious or indecisive when making trading decisions because waiting too long could cause you to miss out on a good profit opportunity.
(4) Let your profits run, but don't let greed get in the way. Once you've already made a nice profit on a trade, consider taking either some or all of the money off the table and move on to the next trade.
(5) Use appropriate stop-loss orders at all times to try to minimize losses and never let your losses run too far. Almost every trader at some point makes the mistake of letting his or her losses run in hopes that the market will eventually turn around in his or her favor but, more often than not, it simply leads to an even greater loss. You win some, you lose some. Simply learn to cut your losses, take your occasional lumps and move on to the next trade. To avoid letting your losses run, get into the habit of determining an acceptable profit level as well as an acceptable risk tolerance level for each and every forex trade before entering the market.
*In volatile, or fast moving, market conditions, stop and limit orders become market orders to be filled at the prevailing price, which may be vastly different from the desired price. Due to this, there may be substantial losses. Stop-loss or limit orders do not always guarantee a fill, especially during fast-moving market conditions, such orders may not be filled as placed, and substantial losses may still occur.
(6) Trying to pick tops and bottoms is another common trading mistake. If you're going to trade tops and bottoms, at least wait until the price action actually confirms that a top or a bottom has been formed before you take a position in the market.
(7) Last, but not least, always do your homework and stay current on global events. You never know what's going to set off a particular currency on any given day.
 |
 |
 |
 |