Why Trade in Currencies?
There are 10 major reasons why the currency market is a great place to trade:
1. You can trade to any style - strategies can be built on five-minute charts, hourly charts ,daily charts or even weekly charts.
2. There is a massive amount of information - charts, real-time news, top level research - all available for free.
3. All key information is public and disseminated instantly.
4. You can collect interest on trades on a daily or even hourly basis.
5. Lot sizes can be customized, meaning that you can trade with as little as $500 dollars at nearly the same execution costs as accounts that trade $500 million.
6. Customizable leverage allows you to be as conservative or as aggressive as you like (cash on cash or 100:1 margin).
7. No commission means that every win or loss is cleanly accounted for in the P&L.
8. You can trade 24 hours a day with ample liquidity ($20 million up)
9. There is no discrimination between going short or long (no uptick rule).
10. You can't lose more capital than you put in (automatic margin call)
This tutorial is designed to help you develop a logical, intelligent approach to currency trading base on 10 key rules. The systems and ideas presented here stem from years of observation of price action in this market and provide high probability approaches to trading both trend and countertrend setups, but they are by no means a surefire guarantee of success. No trade setup is ever 100% accurate. That is why we show you failures as well as successes - so that you may learn and understand the profit possibilities, as well as the potential pitfalls of each idea that we present.
The 10 Rules
1. Never Let a Winner Turn Into a Loser
2. Logic Wins, Impulse Kills
3. Never Risk More Than 2% per Trade
4. Trigger Fundamentally, Enter and Exit Technically
5. Always Pair Strong With Weak
6. Being Right but Being Early Simply Means That You Are Wrong
7. Know the Difference Between Scaling In and Adding to a Loser
8. What is Mathematically Optimal Is Psychologically Impossible
9. Risk Can Be Predetermined, but Reward Is Unpredictable
10. No Excuses, Ever
Trading is an art rather than a science. Therefore, no rule in trading is ever absolute (except the one about always using stops!) Nevertheless, these 10 rules work well across a variety of market environments, and will help to keep you grounded - and out of harm's way. (If you have questions about currency trading you might want to check out, Common Questions About Currency Trading.)
TradingLearn to add structure to your trading methods with these six important steps.
TradingUsing the right strategy can lower the risk of failure and protect your profits.
TradingCombine trailing stops with stop-loss orders to reduce risk and protect portfolio value.
TradingNot every moment is a good trading opportunity. Put each trade through this five-step test, so you're trading only at the best profit potential times.
TradingIf holding on to losing trades is human nature, this tool will help protect you from yourself.
TradingWaiting may be the biggest key to reeling in that trophy investment.
TradingUsing options instead of stop-loss orders adds finesse and control in limiting losses.
TradingIt's impossible to avoid disaster without trading rules - make sure you know how to devise them for yourself.
TradingThere are several simple strategies you can use to protect yourself from downside risk.
TradingThese steps will make you a more disciplined, smarter and, ultimately, wealthier trader.