Top Forex Guidelines for the Average Trader

Common Sense Guidelines for the Average Trader
Following are a few rules for the traders to look into for effective and long lasting trading.
1. Effective trade relies upon sufficient liquidity and consistency in spreads not merely on the position of the broker. Look for brokers that close out at decent market prices rather than the position alone.
2. Enforce careful money management skills. Use leverage reasonably and always be ready to stop a trade.
3. Before actually setting out on a trading venture, devise a plan with fair risk and reward parameters. Keep your feelings in check at all times while trading. Pay heed to the stops and look thoroughly before buying or selling.
4. Avoid punting (i.e. trading merely for the fun of it)
5. Do not open new trades expecting for them to compensate for losses except if it is a step of some strategic plan.
6. Use trailing stops when trading with the trend. And when trading against the trend, don’t resist accepting profits no matter how small they might be.
7. Do not miss out stops at the obvious levels (round figures e.g. eur/usd 1.20). These stops have a higher probability to be triggered.
8. Do not establish success on the outcome of one trade. Do not allow your emotions to blur the actual status of some trade. Trade in accordance to actual facts and figures.
9. Trading in foreign exchange involves dealing with multiple currencies. Look out for the crosses as on spot trading is majorly affected by them. Crosses (euro vs. jpy or eur vs. gbp) may be utilized as indicators of the direction of spot currencies despite the fact that you may be trading in them.
10. It is imperative to be aware of the daily news in the market so that you may not be taken in by surprise. Be cautious of the situation that your trade precedes an economic number and be mindful of volatility coming right behind the key releases.
Beware of illiquid markets
Be cautious of the illiquid markets. Line up your trading strategies during the holiday or the period before that to take into consideration thin liquidity. Be careful of the fact that central banks intervene in illiquid markets.
In trading where leverage involved is too high, slightly stormy news can end up wiping out traders’ capital. FX should not be treated like a casino if you want to succeed. It should be adopted as a long term business venture, comprising of appropriate money management strategies so that you can actually last for long.