Forex Trading Tips http://www.netpicks.com/best-forex-trading-tips/

Forex is one of the most popular markets experienced and beginning traders take part in. With low initial deposits, free trading software, and

virtually 24 hours access, it's extremely tempting for people to jump in with

both feet without having much in the way of trader training.

This is dedicated to some of the best Forex trading tips taken from not only real world trading experience but also from the many

who Netpicks "family members" who've enjoyed success trading one of our trading systems. Think of it as a checklist you can follow before you set off on your trading

journey.

There are 3 broad categories that make up "what it takes" and these are

something that successful Forex traders have not only understood, but

aim to excel at. These 3 items when combined can set the stage for your

trading success

A FOREX TRADING STRATEGY EXCELLENT MONEY MANAGEMENT SKILLS AN UNDERSTANDING OF PSYCHOLOGY AS IT RELATES TO TRADING

The following trading tips are going to focus on what has a direct effect on your success or failure. If you need

the basics such as charting information, brokers, or even Forex

demo trading, you can download that information for free from this link.

http://www.netpicks.com/forex123/

Trading Strategy Before we get going I want to mention

something very important:

There is no holy grail in Forex or any other market regardless

of what the emails and marketing websites say!

Focus on a Forex trading method that you can understand, replicate, and has

proven itself to have an edge over time. Any system or method based on the mechanics behind price, does not totally rely on lagging indicators, and can be easily explained is something you may want to investigate further.

A trading strategy, regardless of the market you trade, should have the following two important variables:

Setup - What constitutes a valid trading opportunity? Trigger - Once the setup occurs, how are you triggered into the trade?

I am going to use a supply and demand trading example to explain what a

trading setup is. Supply and demand in this regard simply refers to battle of

the bulls, bears, and the imbalance caused by having one group being able

to exert control over a market.

This is an actual Forex trade setup and for this trading tip, I wanted to use one

that worked.

Remember that your trading wins and losses will come at a random

distribution.

I used a trend line to show the price traded inside a channel and then

spiked up and broke through the top of the line before dropping hard. When this occurs, it highlights an

important area to watch if/when price comes back to it.

You can see the drop (1) was fast and hard which shows - an imbalance of buyers/sellers where sellers totally

overwhelmed the buyers. (this is KEY)

Price takes about two days before it drives hard to the bottom of the

yellow zone that was started way back at number one. This becomes our

setup although in this instance, a sell limit was set a few pips below the

supply area.

The larger time frame for this chart was sitting at a supply level and our

level here is right up against it. Buying into a supply level (or selling into a demand level) when right on

top of it will not be a positive for your trading account.

I want to draw your attention to the large green candle. It should be obvious that a large number of

contracts were bought to drive price this fast and hard in a 30 minute

period. The high represents the last buyer who then saw price plummet and take them into a losing trade.

Without a trading strategy, it's easy to justify buying that large candle. With a

trading strategy (what this section of Forex Tips is about) you would not

have been a buyer and this highlights why an actual trading strategy is

paramount to your future as a trader.

The setup occurred when price came into the zone we were watching.

Now we need a trading trigger.

In this trade, the trigger is actually price just coming into the zone. Let's

say that you need a little more confirmation and require an actual

trigger to get you into the move.

Important: Confirmation can often require price moving in your direction

which could increase your stop size thereby lowering your position size.

Two trade triggers can be seen on this chart. The MACD is a momentum

indicator and when you see the histogram drop lower, you can use that for your

trigger into the trade. This indicates that the upside momentum is starting to lessen.

This is NOT foolproof (nothing is) but taking into consideration our trade setup and what it represents, it's not a bad play.

We also have a mini trend line connecting the lows of the candles and

you may elect to simply short this market upon the break of that line.

No entry is the perfect entry so we can

just use what price is showing us.

This chart has inside candles and these same candles don't show with

certainty whose in control. We can tell that momentum is slacking and given the nature of this setup, just shorting when the market shows weakness is

also a viable trading decision.

This is not a complex trading method but has proven to be very effective

and allows larger position sizes due to the "tight stop" that is usually used. It

has both aspects that we need: a setup and a trigger.

If your trading system does not have these two variables, seek

out a better system.

The bottom line is this Forex tip is all about keeping things simple. Don't get

bogged down in confusion.

The main drawback of this type of trading though is at times, people have

an issue quantifying the setups. For those people, a trading system by

Netpicks may be something to consider.

All the setups are mechanical with a little bit of art, which means when certain variables are met, you are

informed of a trading opportunity. All targets, stops and entries are printed

for you and that helps keep you consistent in your trading.

Money management is not the most glamorous Forex topic but without a

full understanding of risk and leverage, you run the risk of account ruin.

Nobody is able to tell you what risk to use per trade but the standard quote

is usually 1-2% of your account balance. I will add two things to that.

.5% is conservative and allows new traders to take the losses without too much account damage. Consider using the balance +/- the p/l of any open trades.

This can be an in-depth topic with examples and "what ifs" however

following two basic account management tips can go a long way in protecting your account from a string

of losses and ending your Forex trading career.

What you are thinking of risking, cut that amount in half.

Ensure your stops are not just a suggestion..but a demand that will be

executed.

While the majority of traders simply use their account balance as a sign of success or failure, it does not go far enough pointing out where you can improve. It also doesn't show you

where the bleeding is happening with your trading.

A free software application is available called the Ultimate Trade Analyzer and you will see this software that you can

download right now, is feature rich.

http://ultimatetradeanalyzer.com/simple-download/

Important Trade Statistics like Profit Factor, Expectancy, Expectation, Avg Wins/Avg losses, Net Profit, Number of Trades, and more. Wins vs. Losses; learn their characteristics so you can make subtle yet powerful changes to your trade approach Learn the best time to quit trading each day with our "Power of Quitting" Analysis tool for both your am and pm session trades

Mechanical and automated trading have their pluses especially when you realize that trading psychology would

not be an issue.

We would have no issue sticking to any type of trading whether it is trend

trading or any of the numerous mean reversion systems.

Our trades would execute and either our targets would be hit for profits or our stops would be hit and protect us

from over sized losses.

We would risk the appropriate amount for our account size and trading

system expectations.

Stating the obvious - We are human.

We are all subject to emotions and doing things that we know are not

good for us. We make excuses why we do things.

For instance, taking a few losing trades and then seeing price bounce back, we decide to ignore the stop the next time we trade. This one doesn't come back

and your account is drained.

This happens all the time!

Again, this is such a vast subject and there is no way to do it justice in a

blog. However, what I am about to say was one of the most important Forex

tips I ever received.

Why?

Because it encompasses so many things such as:

Follow your tested and proven trade plan Use stops to protect your account Ensure your risk per trade can withstand a string of losing trades Don't over-leverage

HERE IT IS: EMBRACE THE FACT THAT WINS AND LOSES COME IN RANDOM

DISTRIBUTION.

This means that we don't know if the next trade is going to hit our targets or register a loss. In fact, we don't know

if the next 3 or 5 trades will win or lose.

What we do know is that it will win OR lose.

Can you see how understanding that basic fact makes it crazy to risk too

much on the next trade?

How it makes moving your stop further from price is not a smart thing to do? How skipping the next setup even though it is a perfect trade plan setup is senseless?

How increasing your risk % on a sure thing is a suckers bet?

You have to give yourself a fighting chance with every trading opportunity

that presents itself. Embrace not knowing and do everything that makes up smart trading on every

single play.

You don't know if the next trade will return the recent dollar losses back

into your account. It makes no sense to skip it.

You don't know if price will bounce back so it makes no sense to not honor

your stop.

You don't know if the next trade will be a loser (with slippage) giving yourself a larger pip loss. Makes no sense to increase risk.

In my opinion, how to trade Forex successfully means doing everything you

are supposed to do on every trade.

Every trade, give yourself the goal to improve on every aspect of the three

categories mentioned above. It is my hope that this assembly of Forex trading tips helps refocus you to act and think like a professional trader who enjoys the good

life because of doing all the right things.at the right time..which is every time.