Forex Trading Tips
Updated: Oct 19, 2020
Forex Trading Tips #1
#1 Never make a war with the trend. Some trends may last longer than expected so that would drag you down and your mind would be getting blurry and sceptic thereafter. Take every concurrent set of open positions for a pair as a unique case. There will be other new opportunities if you can cut off the risk at an appropriate level.
Forex Trading Tips #2
Forex is a strategy game about ‘not to lose’ !
You have to set a simple rule about ‘reasonable losses’ which,now, makes you a real trader, a good risk taker. Life , so the Forex Market, favors good decision makers.
Good decision makers go with a foreseeable risk that is acceptable for them beforehand.
Forex is a ‘not to lose game’, but in case of losing, determine the amount you want to risk at the first place. So the core point is Stop Loss. You can determine a Stop Loss either for each trade or fort he group of trader in same pair or fort he total of them according to your risk appetite.
Forex is not your friend, it is totally a job for you. You might be sitting in front of it with pyjamas or drink something with it, but do not expect it to pretend to be your friend.
Forex Trading Tips #3
You should know the characteristics of the pairs you are trading with. Most traders trade a few pairs, it is good for focusing. If you do not use automated systems, you should choose the pairs that fit your goals. How do you define a pair? The length of its trend in terms of pips and duration, the volatility and the length of waves, the best liquidity trading hours, Central Bank’s interest rates’ differences, how much the economies import/export to each other, correlation with other financial markets instruments ( e.g. CAD is always correlated with Oil prices, sometimes it leaves the correlation line for a few weeks and then turns back to it. You should know this essentially before CAD trading.) The list is long for defining the characteristics. But you know them all beforehand. So which pairs are fast movers and which ones are going slower?
Forex Trading Tips #4
Lets make a short list of 28 popular pairs according o their volatility:
Slow moving pairs are: NZD/USD, AUD/NZD, NZD/JPY, EUR/GBP, AUD/CAD and CHF/JPY .
Little faster ones are: AUD/USD, EUR/CHF and AUD/JPY .
Intermediate ones are: EUR/USD, USD/CHF, USD/JPY, EUR/JPY, CAD/JPY and USD/CAD .
High volatile ones are: GBP/AUD, GBP/CAD, GBP/USD, GBP/CHF, GBP/JPY, GBP/NZD, EUR/AUD and EUR/CAD.
I will give you a detailed list of them with the average intraday pip difference later.
The importance of that is you must consider these numbers for setting your lotsizes, Stop Loss and Take Profit levels, to decide whether to use an averaging down or some other strategies for he pair, and even in case of deciding to open a brand new position in another pair.