Forex Trading tips/Advices

Forex trading is no longer a mystery. Everyone can learn how to trade and everyone (of a legal age) can open a Forex account.
 Years ago, even today traders keep making mistakes, recovering and just to find that there are more challenges ahead.

Some say Forex trading is simple, while others argue that it's not, and all depend on the $ amount you put at stake.

Whether you're a beginner or an experienced trader, I’d like to present a series of trading tips to help you get a grasp of Forex trading with its challenges and risks.

Tip 1. Gamblers go to casino. All unproved, spontaneous actions in Forex trading — are a part of pure gambling.

Any attempt to trade without analysis and studying the market is equal to a game. Games are fun except when you lose real money...

Tip 2. Never invest money into a real Forex account until you practice on a Forex Demo account!

Allow at least 2 months for demo trading. Consider this: 90% of beginners fail to succeed in the real money market due to lack of knowledge, practice and discipline. Those remaining 10% of successful traders had been sharpening and shaping their skills on demo accounts for years before entering the real market.

Tip 3. Go with the trend!

Trend is your friend. Trade with the trend to maximize your chances to succeed. Trading against the trend won't "kill" a trader, but will definitely require more attention, nerves and sharp skills to rich trading goals.

When a trend is up you don't want to be selling.        

Selling when a trend is down, you don't want to be buying.

Tip 4. Always take a look at the time frame larger than the one you've chosen to trade with.

It gives the bigger picture of market price movements and thus helps to clearly define the trend. For example, when trading with 15 minute time frame, take a look at 1 hour charts.

In the same way: trading with 1 hour charts would require obtaining a picture of daily, weekly price movements.

If a trend in Forex is hard to spot — choose a bigger time frame. Up and down market patterns are always present. Make sure you know the dominant trend, unless you are a scalper. Scalpers have no need to spend their time studying large trends, instead what's happening in the market here and now (on 1-5 minute time frame) is their main concern.

Tip 5. Never risk more than 2% of the total trading account.

One important difference between a successful and an unsuccessful trader is that the first is able to survive under unfavorable market conditions, while an unsuccessful trader will lose his account after 10-15 unprofitable trades in a row.

Even with the same trading system 2 traders can get opposite results in the long run. The difference will be again in the money management approach. A quick fact to get your mind thinking about money management: losing just 50% of you account balance requires making 100% return only to restore the original balance.

Tip 6. Put emotions down. Trade calm.

Don't try to revenge after losing a trade. Don't be greedy by adding lots of positions when winning.
Overreaction blocks clear thinking and as a result will cost you money. Overtrading can shake your money management and dramatically increase trading risks.

Tip 7. Choose the time frame that is right for you.

Choosing wisely means that you are comfortable and have enough time to analyze the market, place and close orders etc. Some people can't wait for hours for the price to make a move, they like action and therefore prefer smaller time frames. On the contrary, for others 10-15 minutes is a hustle to be able to make the right decision.

2. Returning the lost capital is harder that it seems to

Let's take a look at calculations where a trader has lost some part of his account. How much effort will it take to recover the original account balance?

Account     %of account lost  New balance Need to make

$ 5000  25%         $ 3750            35% of the new balance ($ 1250) to cover losses

$ 5000  50%         $ 2500            100% of the new balance ($ 2500) to cover losses

$ 5000  75%         $ 1250            300% of the new balance ($ 3750) to cover losses

Note that it's only about covering losses: Who is going to make money then..?

And when..?

Now, here is a challenge: try on your demo account to gain a return of 300% or at least 100% of your original account trading as it were the real money. Will that be easy? I don't think so. Can you prove me wrong?

3. Calculate risk / reward ratio before entering a trade

When chances to win in a trade are smaller than potential losses, don't trade! Remember — staying aside is a position.

For example:

losing 40 pips versus winning 30 pips,
losing 20 pips versus winning 20 pips,

Both examples are showing a bad risk management.

Before entering a trade, reassure that risk / reward ratio is at least 1:2 (but ideally 1:3 or higher), which means that chances to lose are tree times less than promises to win. For example: 30 pips of a possible loss versus 100 pips of a potential win is a good trade to consider taking.

Adopting this money management rule as a must, in the long run it will dramatically increase your chances to succeed in making stable profits.

Log onto www.forex-market-hours.com and Google the stock market time zone.

Active currencies

London/New York Session

- EUR/USD, - USD/CHF, - GBP/USD

Tokyo/Sydney Session

- EUR/JPY, - AUD/USD, - USD/JPY, - AUD/JPY

Sydney Session

- AUD/USD, - EUR/USD

Most active trading days are:

Tuesday, Wednesday and Thursday then Sunday (opening)

·        Mondays are days when traders are mostly watching and analyzing the market and predict further price moves.

·        Fridays are traded approximately till noon, after that all action slow down and almost freeze before the actual market closing at 5pm EST

·        The most volatile currency pairs are: GBP/JPY, EUR/NZD, GBP/AUD

·        The least volatile currency pairs are: EUR/GBP, NZD/USD and EUR/CHF

News Fade

Forex related news, whether apparent and/or real, immediately precede an upward spike or a downward spiral. This is because this is the most accessible means of information gathering for traders in general, and provided and reported by reputable news institutions that are generally reliable. This usually lasts for 10 to 15 minutes and then traders will see a slow return to previously traded levels. For example, historically speaking, Non Farm Payroll (NFP) which is released at the 1^st Friday of every month is used by most traders to determine the value of the US Dollar (USD).

In application, all you have to do is look at the global price market and pay special attention to news related trading which are indicated as “high”. The key here is to wait for 10 to 15 minutes from the time the news of the day preceded the spike. After that, you trade in the opposite direction of the price movement. In order to generate profits, you watch out for the following:

• Your “Take Profit”, which is the trading level immediately prior to the news.


• Your “Stop Trading”, which is set as near as the most recent low or high from the news.

Inside Day Breakout

Essential to this strategy is known as the “daily candle”. The trader looks for one that stays within the previous trading day’s high and low. In other words, the candle of the day never goes above or below the high and low of the immediately preceding trading day. The more candles that meet this condition within consecutive trading days the better. The strategy is simple, the trader depending on his/her position does one of the two things:

• Buy one Percentage in points above the previous day’s high.


• Sell one Percentage in points below the previous day’s low.

Two Hour MACD Cross

This works best on trending currency pairs. Make use of at least two indicators, preferably the MACD and the 200 Period Simple Moving Average. Both indicators will be used to determine the change in trend and to determine the direction of the trend respectively. Bear in mind that price action below the latter indicates a downtrend and the reverse indicates an uptrend. With the MACD, you make use of two strategies:

• Buy when there is an uptrend and the MACD line goes over the signal line.


• Sell when there is a downtrend and the MACD line goes below the signal line.

In Closing

The three strategies discussed are simple to understand, easy to implement, and require very little time to close. However, there is no such thing as a foolproof trading strategy. As such, a stop loss order cannot be emphasized enough. In order to increase your competence and confidence, it is best you make full use of a Forex demo account, undergo continuing Forex education, and always stay calm regardless of the trading direction.