Forex Investment and Currency Trading

What to Follow:

• Always use stop losses to your position at a smaller loss preventing a large devastating loss
• Do not change your stop loss after you’ve entered it
• Close your position when you have a decent profit
• Do not over trade and do not hold oversized positions
• Recognize the difference between a trending market and a range bound market
• Know who is in power, bulls, bears or neither
• Recognize when your position is good, r if it’s a miss, act swiftly and exit
• Use if/then logic. If interest rates go up, price goes up, etc
• Use small lot sizes
• Place paper trades using your trading demo account until you are sure of your trading plan
• Trade to trade well not to make money
• Do not force the trade by entering at any old price
• Use the best entry and exit price points possible
• Always set your risk reward and money management stops accordingly
• Never take a trade unless three or more indicators come together
• Always trade in the direction of the current trend
• If you’ve had a string of profits do not become over confidant and stop using rules
• Never attempt to make up for a previous loss by increasing lot size or overtrading
• Keep your losses small and let your winners run
• Always use a trailing stop loss to protect your profits
• Keep a journal of all your trades
• Always follow these rules

Recognize the feelings of fear and greed inside of yourself. The displace them with a traders skill set of mental discipline, emotional self control, knowledge and experience. You can maintain a high level of seriousness about your trading capital with an objective foundation of rules employing effective money management techniques. To conserve your trading capital use risk reward ratios, protective sell stops, trailing stops and limit orders.

What to Avoid:

• Not taking your stop loss when it is small
• Adding to a position that is going against you in order to average in
• Impatience and over trading
• Chasing the currency’s price beyond the ideal entry point
• The need to make up for a recent loss
• Leveraging too much of your trading capital
• Trading in a trendless or choppy market and trying to forcing trades
• Having too tight or too large a stop
• The need to be right or stubbornness
• Ignoring your stops
• Forgetting the details of your trading strategy
• Not reviewing your trade after a loss
• Trading out of boredom or when you are tired just to be “in” the market
• Trading because you told yourself that you’ll make x amount of dollars each day
• Not using confirmation
• Not staying with one trading strategy
• Not knowing your risk tolerance level
• Trading based on the wrong time frame for your risk tolerance
• Setting your stop too far away for your risk tolerance
• Not matching the amount of money in your trading account with your risk tolerance level
• Keeping a running total of how much money your making or losing
• Trading to prove someone wrong or so that you can brag that you made a killing