Have you ever felt lost watching charts and unsure of where and when to set a position? Do you feel you need a spark to get your trading going?
No worries, there are no secrets anymore. The most profitable and renowned Forex traders share their best pieces of advice with you.
24 contributors of FXstreet.com have been asked to give us ONE practical and precise tip that they use in their trading and analysis, an idea that maybe breaks with the general schemes that the majority of novice traders have. Something fundamental in their trading, that makes the difference for them.
We'll publish 3 tips per day, some of them might open your eyes on a new reality. Secrets are over.
Stick With the Trend: Tops and Bottoms are Only Evident in Hindsight
by Kathy Lien - GFT, BKForexAdvisors and kathylien.com
The trend is your friend may be one of the oldest maxims in trading but it is also one of the most important when it comes to the forex market. Trends in currencies can last for days, weeks and sometimes even months. Currencies are typically seen as little confidence indicators for a country and the outlook for a country usually gets progressively better or worse. Also, due to the significant amount of participation and speculation in the forex market, when sentiment turns in one direction, it can be very strong and lead to sharp moves in currency values. As a result, I have generally found far greater success going with a trend than fading it. Tops and bottoms are only evident in hindsight and it is much better to wait for confirmation that a trend has ended than to arbitrarily pick a top or bottom. The biggest fear of many traders is that they buy the top or sell the low. To avoid this, I prefer to join a trend at value. There are many ways to identify the value points through the use of my Double Bollinger Band Strategy or retrace to a Moving Average.
Market volume with no technical indicators
by Valeria Bednarik - FXstreet.com
Determining market volume could be critical when it comes to forex trading, as we understand that technical signals have higher probabilities of success when they come along with the right volume. For example, the break of the neckline of a figure, or a support or resistance level, are always considered reliable if volume is high, while pullbacks to those areas should show a lower volume, to give our signal further support.
However, not everyone realizes that volume indicators tend to be tricky: several of those are just providing information about the volume traded in the broker/platform that we are using to work; they can’t measure the volume of the whole market. So how can we easily determine whether there is high or low volume at a certain moment?
The easiest way for me is mostly a visual trick: I turn to my 1 hour chart, or even 30 minutes one, when I see something that could be understood as a break or a sign. If that particular candle is at least twice as long as the average that the pair moves in that particular time frame, I understand there is high volume favoring my signal. For example, if the EUR/USD moves 25 pips per hour on average, the candle that triggers the signal should be at least of 50 pips (double the 25) or more. Easy, clean, and with no extra indicators to mess our trading strategy.
Never risk more than 2% of your account at once
by Yohay Elam - ForexCrunch
As with anything new, you're likely to make mistakes, learn from them, and then improve. Many new traders risk too much of their account, and burn it out before learning anything.
Money management is the "secret" to avoiding this fate. This abstract idea can go down to the 2% rule. Making 2% an overriding priority means no stop loss movements, using lower leverage, making a bigger initial deposit, having higher spreads, or anything, else that will keep the losses limited. Some things are more comfortable to do than others, but keeping this rule will likely yield in better results for newbies in the long run - keep them away from burning their account.