1. Reduce trading frequency and don’t overtrade

Many novice traders just got too impatient to wait for quality trades. Therefore, they trade too much and the worst is they take any kind of low probability trades. I have mentioned that forex trading is all about probabilities no matter what kind of forex strategy you use.

Though I also said that good trading opportunities will come easily, you must still observe the rule of taking only quality rather than quantity forex trades. There are traders who only trade 3 or 4 times a month and it is already enough for them to make a living in the forex market.

2. Diversify your forex trades

diversification does not only have to apply to Stocks, you can use it in forex trading too. If you have a small account and you think that you will only need to concentrate on one currency pair e.g. EUR/USD to make a living as a Forex Trader, then you are missing out something.

To become successful in trading and become a full time trader, you will need to trade more than one currency pair because while one pair does not gives you forex signals, the other pairs may have trading opportunities.

3. Forex money management is about calculated risk and probability.

The fact that many traders try to avoid risk in forex trading is totally wrong! How can there be no risk in the forex market? The solution should be how you are going to handle risk and not how to avoid it. Some forex trading tips here is that you should have a good risk to reward ratio as a money management rule.

Imagine that you risk 200 pips just to get the 20 pips Profits, then you will have to get 10 trades right to breakeven if you have lost one! This is not the correct way of trading. Instead, if you risk 30 pips, then target 60 pips or more as profits, so that one winning trade is already enough to cover if you have 2 lost trades. And good risk to reward can lead you to achieve triple times your forex profits!

1. Always prepare for the worst, think how to protect your trade first!

Almost all the traders will think how much money or profits they are going to make when they trade. This is a wrong mindset. If you are a beginner in forex trading, then you should assume the worst first and not thinking about profits in the first place. You should be very eager to protect your trade from losses by shifting it to break even after your trade has around more than 40 pips in profits. The trade is also considered won even it has broke even.

2. Don’t take high leverage for granted.

Many Forex brokers offer a high leverage of 100:1 to 400:1. True it is very tempting, but you should not use very high leverage for a beginning and for a small Forex account, it is not advisable to use more than 50:1 or 100:1, so as to prevent your account from going bust. Traders thought they can win big using high leverage, but what if they loose? Their trading capital goes into the drain too.

3. Not risking more than 1% to 5% of your trading account.

This is a very important money management rule. How much do you risk for every trade? Forex trading is all about high probability and calculated risk. If you think you can’t take risk at all, then you shouldn’t be Learning to Trade Forex at all. For a small $1000 account, it may seems by risking 1%, the gains are very small too, but that’s the right way to build your capital. For me, I’m a conservative trader and I risk only 2% of my trading account per trade.

Forex trading psychology is the most important factor for trading success or failure, but it’s sad to say that many traders do not have that factor as priority and instead keep looking for better Forex trading strategies.

1. Do what you are supposed to do. When the trend is weakening, you should take steps to protect your profits regardless of the forex systems that you are using. Remember that in forex trading, you should be thinking how to minimize losses first and not thinking how to win.

Even a breakeven Trade is considered a successful trade because it’s not a loss. Likewise when the trend goes in your direction, you will want to set a higher level Profit target and on the same time protect your floating profits.

2. You do not like, hate or fall in love with your trades. The Currencies pairs are not your friends in the forex market and your only friend is forex trading psychology. Trading with a plan is the #1 forex Tips because when a trader is already in a trade position, he/she tends to see the market differently from the first time of analysis. He hopes that the trade will move in favor of him and neglect the factors which may change the Market Conditions.

3. Increase your position size accordingly. Increase your position size when you have an increase of maybe 10% of your account, this is to build up your trading capital. Likewise, you should Reduce the lot size that you are trading when your account have reduced by 10%.

4. Expect the unexpected. In forex trading, always be prepared for both good and bad things. Understand those events and be prepared, so that you can take necessary actions when it happens to you. A good forex trading psychology is where you can take into consideration things that are unpredictable in the forex market.

For example, if the trade is going in your direction, you must have a mental preparation that it can go against you anytime, so that you will not be surprised if that really happens.

5. Remain emotionally detached. A good forex strategy is that you don’t check how is your trade going on every now and then. If you keep watching it, you are going to make wrong decisions I can guarantee you! This is because greed and panic may happen and therefore you adjust the trade. Just leave it to the market to hit stop loss or profit target once you have traded.

There are three sessions in total and they are scheduled for different times of the day so many people from around the world can access them at a convenient time. The seats to this Online training session are completely free, but there are only a limited number of places available. So I suggest you book your place now if this is something that interests you.

Here’s the link:

http://www.theforexarticles.info/forexcoaching.html

The best personal advice that I can give anyone coming into the forex market is that you need to realize there are three keys to success that there is just no getting around, mindset, risk management and strategies. Once you have a solid foundation built on these three elements, you are setting yourself up for success in the Forex Trading market.

The most important of the three main keys is mindset. It is the basis for everything that you will build in the market and your mindset has to be right. Unfortunately, most forex traders have a mindset that is wrong in that they are centered on making a lot of money and are missing out on the big picture. What they need to focus their mindset on is setting up successful trades. If your focus is on that, the money will naturally come.

Developing a good risk management program should be your next concern. Risking too much of your bankroll can have you out of the game too quick. You need to establish a level that you are comfortable with and that will allow you to get through a couple of rough patches without depleting your bankroll by a significant amount. It is recommended that you establish this level at somewhere between 2-10%, personally, my line is 5%.

Your forex strategy is the final key to your success. Your strategy is how you approach the market based on your analysis and every trader tends to develop one that will work best for them. You can adapt someone else’s or develop one of your own, but it should consistently produce a profit day in and day out. It is only natural to hit a hiccup every now and then, it happens, but in the long run your forex trading strategies should allow you to produce winning trades time and time again.

These keys are very simplistic, but do not underestimate their importance. Getting your mindset right, setting a good risk management program and developing a sound strategy will be some of the best advice you will ever receive in becoming a successful forex trader.

forexaut.info When you decide to Trade trade Pairs not Currencies per se. A very lucrative pairing at the moment is the Euro and the US Dollar. They fluctuate daily and depending on the drivers –eg the price of Oil or bank closures etc the movement can be very significant. Other Pairs to consider might be the USDollar and the UKPound, the UK Pound and the Euro. The Yen and the US Dollar might also be considered.

These and much more questions are being asked daily by a lot of traders around the world, most of these questions are focusing on the best ways to get Profits, from a long experience trading FOREX I could say that the best way to get profits in forex market is to avoid or at least reduce loss and this can be achieved by a good money and risk management technique. A lot f these techniques were studied and published, a lot more are being published daily.

One of the best techniques I studied and used was applying Pareto law to the trading system, this law states “for many events, roughly 80% of the effects come from 20% of the causes.”, this law is also known as the 80-20 rule, the Pareto principle, the law of the vital few and the principle of factor sparsity and it was named after the Italian economist Vilfredo Pareto who noticed that 80% of the lands in Italy was owned by 20% of the population at that time.

How can we use this as a money management technique?, while it is not hard to use this principle for that purpose it’s not easy to keep running in FOREX market “specially for fast traders and scalpers” because it requires to organize and observe trading , writing down every trade you enter and analyzing these trades digitally to get a specific results like which pairs are the best for your trading system and give the best return, what are the best suitable times for trading and which trading systems are the most profitable trading Strategies.

Still we have to discuss the mechanism of integrating the Pareto principle into money management system for FOREX trading, as I mentioned above it is not hard to use and apply it to the trading system, it is very flexible so you can apply it in many ways like :

1. Some people will observe trades and will from the result of this observation focus on the most profitable 20% of pairs those gave them 80% of income during exercise period which I recommend it to be at least 3 months.

2. Some others will be focusing time of trading, getting the most suitable 20% time of trading for them “times of successful trades” that they made 80% of successful trades during and of that they can know when the most they are trading successfully.

3. Stop loss and take profit points are important spots to be highlighted by this system, imagine how much will you save if you know the 20% take profit points that gave you 80% of the return and the 20% stop loss points that gave you 80% of your loss, so you can get the best ranges to use when you setup a take profit or stop loss point “i.e. if get 80% of my return of 20% of take profits that ranges 50 pips, I would setup my take profit points around that number always and vice versa in stop loss points case”.

4. Others would be focusing on trading systems, indicating which are the responsible systems for the most of profits or the most of losses in that period of time.

There are a lot of other factors in FOREX trading for achieving gain that can be observed and analyzed based on this principle, combining three to four f them would maximize your profits and reduce your losses dramatically but this is the most hard way to maintain a suitable money management strategy using Pareto law as this requires you to observe your trades and organize them for a long time accurately, this only would affect your trading negatively as you would not be able to enter short term trades easily if you do not have good tools to do. The best resource for FOREX trading is MoneyTec, MoneyTec, – Active Traders Community forum, Chat. MoneyTec is an online trading community that promotes mature, intelligent & respectful discussion in a positive & safe environment for everyone

This is why I recommend you to put every element in a spreadsheet separately and trade in a normal mood, after the examining period over you would be having a lot of data to analyze and get the results for them, hence you would have the ability to combine the results and get the best overall result for the best pairs you are trading profitably, the best take profit and stop loss points ranges and the best time you are trading them, combining these best results you will have a new result which would be for sure the responsible for around 80% of you return.

Once this get done, you are having a suitable FOREX money management strategy that you can depend on, but try to update it always to get the best out of it and notice that “80%” and “20%” are the theoretical numbers, they will differ for sure while keeping just around them.

1. Stick with the plan – if you’ve taken the time to develop a successful and profitable forex strategy or plan, why would you go away from it? The plan was put in place to make you money and you need to stick with it. Don’t get too creative or get too greedy and leave your emotions at home.

2. Follow the trends – following trends is exactly how you’re going to make money in the forex market. Don’t be some type of cowboy and tries to catch a trend before ever begins. Doing this are going against an obvious trend is a recipe for disaster. Trade only when your forex trend system confirms a trend is in place.

3. Protect your money – capital preservation is essential to being a successful forex trader. You can accomplish this by never risking too much of your bankroll at any given time. A good forex tip is that you should never have more than 10% of your money at risk in any one single deal.

4. When the trade goes bad, get out – many traders are susceptible to the pratfall of thinking if they are different from everyone else and that their unsuccessful trade will eventually turn around and become profitable. The fact of the matter is you are going to have losing deals, you just need to get out of them as soon as possible. Get your money back into the market making a profit and don’t stick with a loser.

5. Get out when you’re in the plus – this point is solely about knowing when to take your profit and end the deal. As you enter a transaction, you should have a general idea of where you want the currency to rise to and that will be your sell point. Do not hang on to it too long or you can find yourself losing valuable profits.

6. Get rid of your emotions – in order to be a successful trader, you’re going to have to leave your emotions at the door. Being afraid, greedy, getting too excited or too hard on yourself are all emotions that can lead to financial disaster.

7. Write a journal – you will find this very useful in looking at past successful and unsuccessful trades. You should make notes as to what you bought, when you bought, when you sold it, for how much and why you entered the trade. Over time, you can learn from your mistakes and become a much better forex trader.

8. Have confidence in yourself – when you get in to the forex trading market, you must enter and exit the trade with confidence. Do not just follow the advise of others. But this should not cause you to be overly confidence and take unecessary risks in your trading.

9. When you have doubt, stay out – doubt is nothing any trader should ever have when money is on the line. If you are unsure of the position, wait for the next one. There is simply too much going on in too many good opportunities to allow yourself to go in to something that you have no confidence in.

10. Don’t spread yourself too thin – this means that you should not over trade for the sake of trading. A lot of people will feel as though they need to make every deal that they possibly can regardless of how thin it spreads them. Realistically, you’ll never want to have any more than two or three positions going at the same time. And you should only enter the second trade only when your first trade is breakeven or profitable.

Forex is the short form of “foreign exchange” and Forex Trading refers to the trading of foreign Currencies over the International market. For the commoner and those who have no idea about this Trade and for any one new to this terminology, the whole idea may seem quite intimidating. It is true that it is a little confusing and intricate at the start but once you understand it, it will be like just a cup of tea. The ultimate way to learn Forex starts with you getting a complete hold of what it is and this can be done only when you understand it through and through. The major objective of this form of trading is to exchange currencies of other countries on the basis of the deliberation that the currency, which you bought, will eventually rise in its market value.

To begin with the basics, one needs to understand the fluctuation of this. First you begin with currencies of two different countries, the one which you have and which you wish to sell and the other the one you want to purchase in exchange for the one you are selling. Now it is a good time to get to know about the two most important terms in Forex trading, ‘long position’ and ‘short position’. Long position means the practise of buying a currency that you believe its value is sure to rise eventually giving you a chance to sell it off at a later stage at a Profit. ‘Short position’ means selling a currency that you currently hold and feel that it is going to decrease further and guessing that you can purchase it again when its value drops even more.

Two more concepts to learn in Forex trading is ‘open position’ and ‘closed position’. Open position in the long position means purchasing a currency with an idea that its price is definitely going to go up and when it does, you sell it back closing the position. In the short position, you open the position by putting up your currency for sale believing that it will decrease and when you buy it again at a lower price, you close the position.

Another most common term that one encounters in foreign exchange trading is ‘Day Trading.’ Day trading means short-term dealings done by traders who believe in opening and closing trading in all one day, rather than extending it over a longer duration.

Now you can see that it is not a cup of tea, why should one learn Forex anyway? There are many reasons to it. Like the convenience store round the corner, this form of money making never closes. Because of the dynamic nature of the Foreign exchange market, it has to be operative 24/7 for the traders to play their Forex based on global Economic trends. Also, Trading Costs is lower than trading in other markets. Here trading allows trading on high leverage and the market enjoys limited slippage. Finally, in Forex you can make profits both from the rise and fall of the market.

The data included in the release is calculated from the Dollar-value of merchandise sold by a sampling of point-of-sale businesses, and other non-store retailers such mail catalogues and vending machines. The Census Bureau sends out questionnaires to approximately 5000 firms across the U.S. in order to measure the retail sales volume which corresponds to about 65 percent of the total sales estimate. The data is not adjusted for those firms which do not respond to the questionnaire. Also, due to the small sampling size, there is a significant sampling error involved in the numbers released with the report.

Since consumer spending consistently makes up about two-thirds of Economic activity in the U.S., the retail sales data can shed light on future trends in the Economy, and the policy decisions of the U.S. Federal Reserve, and by extension, on stock, bond and currency prices. A disappointing retail sales release is often greeted with a sell-off in Stocks and falling yields and rising prices in the bond market. The reaction of the forex market can be unpredictable, but an expectation that the Federal Reserve cannot raise rates will result in a sell-off in the U.S. dollar as well, (the opposite is also true, of course).

Components of the Report
The report provides the year to data total change on retail sales volume in dollar value, in addition to statistics on monthly changes. The retail sales data is broken down into the following sectors:

Motor Vehicle and parts dealers: This item includes all new and used car sales, along with sales at accessories, parts, and tire stores. Furniture and Home furnishings stores: Including home decoration, such as paint, but not including repairs and similar items. Electronics and Appliance Stores: Stating the volume of sales of TV sets, washing machines, and others.

Building materials, and related items: The item includes building items sales at retail outlets. Food and beverage stores: This group includes sales data from grocery stores, and beverage stores, but does not include the sales of restaurants, or similar firms. Health stores: This category provides data on the sales of drug stores and pharmacies, but does not report on sales of hospitals or similar health care establishments. Gasoline stations: This item records the sales of fuel at gasoline stations. Apparel Stores: Including the sales of shoes, and items of clothing. Recreation and sports stores: This item only includes stores where actual DVDs, sports items, and similar goods are sold, excluding the sales of movie theatres, and similar public venues. General Merchandise Stores: Reports on the sales of department stores and discount retailers of large and small size. Food services: This category measures the sales of restaurants and drinking places.

On examining the above groups we note that the retail sales figure excludes a large number of firms that do not supply goods to customers. Establishments like hotels, movie theatres, hospitals, and similar service providing companies do not report sales data to the census bureau, and are therefore excluded from the released data. Since the services sector constitutes about 70-75 percent of the U.S. economy, the retail sales data is far from presenting a complete picture of consumer spending in the nation. Along with the sampling error involved, the value of the report in terms of capturing tendencies in consumer behavior is limited.

Evaluation of the Retail Sales Data
In spite of a number of pitfalls involved in the collection and formulation of the retail sales release, traders attach a high degree of importance to the retail sales release, due to the crucial role played by the consumer in the U.S. economy.

Business Cycle
A robust retail sales release will alert the Federal Reserve to the inflationary potential of a growing economy, and will alert the market to the possibility of future Rate rises. A weak retail sales number, meanwhile, will point out the possibility of future weakness in consumer weakness, with widespread implications for other sectors of the economy. In consequence, the Federal Reserve may consider lowering rates to help consumers borrow on better terms, and feel more confident in order to spend more. The business cycle is closely related to these interest rate policy decisions of the central bank, and as such, investors attach great significance to the retail sales release.

Although the release does not include data on most services items, in most cases sales of services-based industries depend on the purchase of goods to create new markets and demand. So the retail sales data has some (but not great) value as an indicator of future economic activity.

Stock Market
The retail sales data is always exciting for the stock market due to the importance of consumer spending for the overall economy. The report itself is not very reliable, but it does create a lot of excitement and volatility for stocks traders. Because of its role in directing the interest rate policies of the Federal Reserve, the retail sales data is crucial for The Future of stock markets around the world.

Consumer’s Financial Health
Analysts can use the information present in this report to gain some insight into both the consumer’s confidence, and his financial health. Especially in conjunction with the consumer credit data provided by the Federal Reserve, the retail sales release can be helpful in creating the picture on consumer spending.

Conclusion
In short, although it is not exceptionally reliable, and although it doesn’t present a comprehensive picture of the consumer’s activities, the retail sales data is popular with traders as a result of its relationship with the word “consumer”. Traders who prefer a volatile atmosphere in trading can make use of this report’s release dates for active trading, and long-term traders can use the reports contents for better Analysis of the consumer’s behavior
From: forex articles