There are many currency trading tips available on the internet. A lot of them seem obvious when you read them but in fact are often overlooked by most currency traders. Here are our top 3 lesser known tips.
All of them have the power to seriously improve your trading performance.
1. Cross check your trading signals
Many systems mention the importance of cross checking your trading signals against another time chart, but it is amazing how many traders go ahead and open a trade without bothering to do this.
Yes, it adds a few extra seconds onto your analysis time. Yes, the price may change while you do this. In some cases you may miss out on a pip or two. But a lot of the time, that second chart will save you from a bad trade, so it is worth doing.
The usual method is to start with a shorter time chart and then cross check against the longer. For example, if your system is based on a 5 minute chart you would check with 15 minutes to 1 hour. If your system is based on the 1 hour chart you would check against the daily chart.
In addition, it is worth taking a look at even longer term charts from time to time, not for signals but just to get an eye for the patterns. If you are a scalper focusing in on very short trades, look at the daily chart from time to time. If you go for longer term trades, check over several months or even years.
2. Do not trade too much
It is hard to stay out of the market when you have not had a clear trading signal for a while. The conditions are almost right – but not quite.
This is where you really understand the meaning of discipline, and find out whether you have it.
Do not be tempted to trade when the signals are not right. You will almost certainly lose in the long run. You may also drift into a situation where you are trading more on luck or wishful thinking than on a system. Again, this is a sure fire loser.
Keep in mind that less can be more. If you make only one trade and it is a winner, you are in profit. If you make four trades and one is a winner, you probably have a loss.
3. Do not dream of getting rich
We would all love to have that dream house with a couple of fast cars parked in the driveway, but focusing your thoughts on this is likely to lead to taking big risks.
Realistically there is no way that the average Joe or Jane with a few thousand dollars in their broker account can make a million in the next few months, so forget it. For every person who gets rich quick with forex there are a hundred or more who lose their shirt because the high risk wiped them out.
So keep your goals realistic and your risk low. That way you have a much better chance of surviving for the long term and making steady money using these currency trading tips.