There is no doubt that experience can be the best source of learning, where your own mistakes make you learn your craft and you eventually succeed. Forex trading is not as simple and easy as it seems, except for those who spend the necessary time doing the extensive research necessary and then abide by their trading discipline every time they trade. If reading books were the key to success in Forex, 90% of traders would be in profit rather than suffering the loss of
much of the money they started off with.
Based on trading experience in the Forex market, there are some lessons that every trader must be aware of in order to curb his losses and let the flow of profits be more consistent.
1 - Always keep calm and never get overwhelmed by your emotions while trading, especially greed and fear, because they will most likely cause you to end up facing losses. The market always favors those who are patient, so do not close out your trades just after the market starts moving in the opposite direction or sit idly by waiting for the right price to enter your position.
2 - Avoid overtrading. You might overtrade just to recover the loss you recently incurred. Greed might entice you to trade to earn more if you enjoyed some profitable trades earlier. The consequences could be harsh if you keep on a losing streak and lose the money you already earned, thus leaving you frustrated and less-confident.
3 - Trading style varies from trader to trader, but trading in the U.S session can make you a decent profit in that the market moves in the same direction 80% of the time. Huge trading volume is the reason behind this as the European session and the U.S session merge, hence resulting in high volume and less choppiness.
4 - Try closing your open trades before data release of high importance since the market exhibits high volatility during that time and often moves in the opposite direction from where you think it would. It simply deceives traders, so totally relying on data releases might not benefit you.
5 - Don't trade against the trend. Going long in a bullish market will certainly earn you profits but if the price starts moving down, selling is not recommended. In fact you should buy more on dips until and unless the market totally changes its trend. The same holds true when the market is bearish; sell more on bounces and don't trade against the trend.
6 - If you follow candlestick patterns for trading, it's better not to trust them before the release of important data such as speeches and press conferences that can have a substantial impact on the market. Many traders close their positions at this time and it results in making deceiving candlesticks.
7 - If you think you should enter long on a certain currency pair, do not buy a huge lot at the initial point of entering. Making small, stair step buy lot entries with certain gaps in between can be much better as it mitigates the risk when you know that the market is really moving upwards. You could make your buy entries after every 10 points for example.
8 - Always go flat on Friday. Closing all your trades before the market closure on Friday can certainly avoid risks because the market might open with a gap in an unfavorable direction on Monday due to some news or events that comes out on the weekend.
These are some things you might not have known if you are a newbie or have been trading for some time, so try implementing these whenever you trade and you will certainly notice improved results.
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