There are plenty of blogs and websites out there promising vast riches from trading Forex. Before you even start exploring charting techniques you need a clear plan of action and below outlines some principle, forex trading strategies to live by.

Perhaps the most common mistake forex traders, or any day trader for that matter makes, is that they have no clear approach. The cardinal rule of trading is to make sure you have a list of defined forex trading strategies BEFORE you make your first trade.

The market is a 24 hour a day market and you are free to both long and short a stock using significant leverage to amplify your gains. Many are attracted to currency trading by the promises of building huge fortunes. They are eager to prove themselves by making a killing overnight. However, these people are usually the first to lose a fortune. Entering currency markets with the simple goal of making millions is NOT a sound strategy.

Many learn the hard way but if you accept some home truths about the Forex industry and plan a roadmap accordingly, you have more chance of success than most. Before trading a currency pair you need a solid reason. Why did you choose this particular pair over another? Do you believe this currency will appreciate in relation to the base? Try to understand what is happening to these currencies and why before you enter a position.

Whether you source fundamental or technical information or both about a pairing, make sure it makes sense to you. Your forex trading strategies should also only concentrate on a few, major pairs.

However, when are you going short or long these pairings? Are you going to buy and sell right away or are you going to time your entry or exit with a market announcement such as an economic news release? In Forex trading, timing is everything and needs to be decided upon before you commence trading.

Forex Trading Australia | Trading Guides, News, Brokers

For example are you going to day trade a particular currency pair and enter and exit the pair numerous times throughout the trading day or are you going to hold them for a while? The amount of time you have available to trade will also have some sort of effect on your Forex trading strategies. Another question traders wanting to trade currency markets need to ask themselves is how much money do you want to make and how much are you prepared to lose if things go badly?

Traders need to have clear Forex trading strategies around their profit targets and stop loss limits. Much like gambling, traders can plunder their profits by holding out too long. Conversely, from time to time traders will also let their losses run thinking prices may turn around and improve their positions. It is incredibly important to trade with discipline and learn to accept that sometimes your Forex trading strategies may be plain wrong.

AUD/USD Forex Trading Strategies May - gepahotalefi.web.fc2.com

New traders often get caught up in unrealistic profit targets. However, as a newbie, breaking even is an admirable target. We touched on this slightly above, but traders also need to have clear Forex trading strategies around protecting their capital. Market forces can move against you unexpectedly and at any moment.

Furthermore, guaranteed stops provide an absolute sale price and eradicates the risk slippage can have on a trade. Place your stop losses as soon as you commence trading to help you avoid sustaining significant losses.

One of the most important aspects of Forex trading is acknowledging that at certain points in time you WILL sustain some losses. While this may look quite low, only risking a small portion of your capital on each trade will without doubt help you avoid significant loss.

It will also help ensure a positive average profit to average loss ratio which will keep you trading Forex long term. Keeping a detailed record of your exact trades will help you uncover exactly which strategies worked.

What Is FX Trading | Learn Forex Trading | CMC Markets

Many traders compile a comprehensive list of their successful strategies and proceed to develop their own Expert Advisors or algorithms designed to execute their successful trading strategies at high speed and with little intervention.

While some coding ability is often required here, successful Forex trading strategies are highly marketable and many a Forex trader has made money from selling their tactics. In summary, the list put together above is preliminary only. Much more knowledge is required to trade Forex effectively and successfully.

However, it is hoped that after reading through some of the key principles above, new traders will develop discipline and the requisite proficiency to go on and make money trading currency.

CFDs are leveraged products. CFD trading may not be suitable for everyone and can result in losses that exceed your initial deposit, so please ensure that you fully understand the risks involved.