Learn about Fibonacci levels and how to use them for trading. Fibonacci can be very helpful in trading, even partially using the study, for example, to determine the best exit, can bring traders to a new edge of trading.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

It can be a huge rush when a trader is on a winning streak, but just one bad loss can make the same trader give all of the profits and trading capital back to the market. Reason always trumps impulse because logically focused traders will know how to limit their losses, while impulsive traders are never more than one trade away from total bankruptcy. To get a better understanding of traders, read Understanding Investor Behavior.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

The most successful traders I know keep their trading simple. They don’t over analyse all day long or research historical trends hours on end and their results are excellent.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

“The holy grail of trading is money management,” says one of our resident traders, Bill Jenkins… an important point on a day like today. “Good money management will make you money, even in tough times. And it will save you tens of thousands, perhaps even hundreds of thousands, of dollars, if you reach the rank of successful trader.
“And it all boils down to this. You must take trades that have at least a 1-to-2 risk-to reward ratio. Of course, 1-to-3 (or higher) is even better.
“In options trading, that is easy to ascertain. If I stand to make 100% but limit myself to a 50% loss, then even if I am only 50/50 on my trade selection, I’m going to come out ahead. Think of it this way: If my risk capital is $500 and I double that once, I have $1,000. If I risk $500 on my next trade and it is a loser, I still have $750 left at the end of that trade.
“Keep risking only $500 until your account is up 300%. Once you have reached $2,000, you can double your risk capital to $1,000. If you ever fall below $2,000, just go back to risking $500 until you reach $2,000 again….
“By only seeking to grow incrementally, always managing your risk, you can even go on a bad streak of 66% losing trades and still break even. Nobody wants to do that. But you better plan on it happening, because it will.”

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Before entering every trade, you must know your pain threshold. You need to figure out what the worst-case scenario is and place your stop based on a monetary or technical level. Every trade, no matter how certain you are of its outcome, is an educated guess. Nothing is certain in trading. Reward, on the other hand, is unknown. When a currency moves, the move can be huge or small.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Always take a look at the time frame bigger than the one you’ve chosen to trade in. It gives the bigger picture of market price movements and so helps to clearly define the trend. For example, when trading in 15 minute time frame, take a look at 1 hour chart; trading hourly would require obtaining a picture of daily, weekly price movements.
If a trend is hard to spot — choose a bigger time frame. Up and down market patterns are always present. Always make sure you know the dominant trend, unless you are a scalper. Scalpers have no need to spend their time studying big trends, what’s happening in the market here and now (during 5-10 minute time frame) should be of only importance to a Forex scalper.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Never invest money into a real Forex account until you practice on a Forex Demo account! Allow at least 2 month for demo trading. Consider this: 90% of beginners fail to succeed in the real money market only because of 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. GET EDUCATED!

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

There is no such thing as a secret approach to understanding the market. Take the time to develop a solid trading system and find out that the secret to trading success lies in hard work and constant learning.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

Learn to use protective stops. Respect them and don’t move. Hoping that market will turn in your direction is a very delusive hope. By moving a stop loss further a trader increases his chances to end up with much bigger loss. When holding to a losing trade too long, and even if funds permit, traders as a rule are very reluctant to accept big losses.

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.

The “no excuses” rule is applicable to those times when the trader does not understand the price action of the markets. For example, if you are short a currency because you anticipate negative fundamental news and that news occurs, but the currency rallies instead, you must get out right away. If you do not understand what is going on in the market, it is always better to step aside and not trade. That way, you will not have to come up with excuses for why you blew up your account. It’s acceptable to sustain a drawdown of 10% if it was the result of five consecutive losing trades that were stopped out at a 2% loss each. However, it is inexcusable to lose 10% on one trade because the trader refused to cut his losses

Anthony DiChi at TradeCurrencyNow,
America’s Forex News and currency information source.