Forex Trading Tips For Success

Forex trading is a great way to make money on the foreign exchange, but you should take your time learning all about it before committing yourself to trading with real cash. Here are 5 Forex Trading Tips to help you on your way to success:

1. Never let your emotions dictate your trades.

You should have a system in place that tells you to the exact penny how much you have at stake on a particular deal. Before you start trading, you should set your take profit limit and also your stop loss limit. These should be automatic cut off points, meaning that when the market reaches either level, your trade automatically closes out and you take your profit/loss. Operating this way, you should maintain self discipline while increasing your chances of being a profitable trader.

2. Follow a step by step process you understand

Too many people get confused and end up combining pieces of technical and fundamental analysis. These are two totally different foreign exchange trading strategies. You need to either follow one or the other not a mismatch of both. Fundamental analysis is best left to the investment houses and financial institutions that have deep enough pockets to fund all the research and computer software you should need. For the ordinary small trader, technical analysis should provide plenty of opportunities.

3. Pick your broker with care

You will need a broker and trading account facilities. Pick one who offers a reasonable spread on prices. Too low a spread and he may be tempted to find other ways of increasing his profit margin. Too high and your profit margins will be adversely affected.

Make sure your broker has the backing of a big financial institution and is regulated and authorized by the relevant authorities. If he cannot provide written proof find a new one.

4. Practice with paper trades before moving onto the real thing

Yes, I know you want to start making money now but believe me you will thank me later. It is only by putting your theory learning into practice that you will see how easy mistakes can be made. It is much better to lose big on a paper trade then to make a tiny profit on a real one. Only when you have a consistent pattern of closing profitable trades, should you move onto using real money.

5. Educate yourself

Regardless of what various foreign exchange courses say, you do need to educate yourself on how the currency markets work and the factors that affect them. You are going to be risking your own money relatively soon, so it is best to do this from a position of knowledge. Yes you will still place trades that will lose you money but hopefully less often.

Probably the best Forex trading tips for success are to use your brain and get yourself a good foreign exchange course to give you the best chance of profits.