When Forex Trading became a reality for the average retail trader, a lot of e-books cobbled up trading advice that made forex trading look like a walk in the park. Many novice traders followed the advice blindly only to be disappointed later when their accounts got drained. Even though there are many people who have become very successful trading currencies with top platforms such as www.usgfx.com. The truth of the matter is that you need an edge for long-term success in forex trading. The edge is what will, over time, end up making you more money than you lose. You need to identify the edge for you to become successful.
Here are 3 forex trading tips that will set on your way to success:
- Using a Simple Forex Trading Strategy
Your forex trading strategy is comprised of two main parts:
- Setup: The setup is what constitutes a good trading opportunity.
- Trigger: Once the setup is in place, what will act as the trigger for you to act?
You need to find something that you can understand and replicate; something that has a high probability of earning you more points/pips than losing over the long-term. One of the simplest trading systems is using the support and resistance levels and trading anything that violates them. Keeping things relatively simple makes it much easier for you to master a system you can easily replicate. Too many moving parts are likely to end up confusing you.
The biggest drawback to this method is that some traders might find it difficult to quantify the various setups and triggers. Luckily, there are trading tools that can do this for you. All the setups are mechanical in nature, which implies that the trading tool will inform you of any trading opportunities every time a set of certain variables such as targets, entries, and stops are met.
- Proper Money Management
Money management might not be the most glamorous topic on Forex trading, and yet is one of the most important. Nobody can tell you how much money to trade, though the standard quote is 1%-2% of your account balance. For new traders, consider trading just 0.5% of your account balance. This is a level that will allow you to make multiple trades while learning the ropes. Make sure that your stops are a demand and not just a mere suggestion.
- Using RSI Correctly
The RSI, or Relative Strength Index, is one of the most frequently used Forex trading indicators. The RSI helps you determine the trend, time your entries and so on. It’s a tool worth learning how to use. Here are some good, but often neglected tips about using RSI.
- Think beyond Crossovers: Many traders tend to focus a lot of their attention on oversold and overbought values when using the RSI. Even though these are important points for entries and retracements, using them excessively can be counterproductive, especially in strong trending environments since extended trends can keep the RSI oversold or overbought for long.
- Watch the Center Line: All oscillators, including the RSI, have a center line that many traders tend to forget. The RSI centerline is located in the middle range with a reading of 50. RSI readings above 50 are considered bullish and below 50 bearish.
These are a few forex trading tips that will help you improve your style of trading and improve your results. Even though there are many forex platforms, concentrate on only the best. Therefore a tried and tested forex platform is www.usgfx.com that’s great for both beginner and experienced traders.