Knowing the difference between a strategy that's not working for you and your style of trading, and one that has given you a few losing trades lately is a tricky concept for a lot of traders to grasp. I hear about traders that have a few losing trades and think it's solely the strategy they're using, and so they switch strategies and are still experiencing losing trades. These are common problems that a trader will face, and making the wrong assumptions can lead to disastrous decisions. It’s important for you as a trader to truly understand how common losing trades are so you know what to expect, and really familiarize yourself with statistics behind trading.
In my opinion, there is no key strategy every trader can adapt to be successful and profitable when they trade Foreign Exchange because every strategy will be used slightly differently with every trader. I suggest going through all the strategies in your demo account, and really exhaust all options your brokerage company has given you access to. You want to make sure you feel confident when using your strategy and make sure you use it in the market and it comes naturally and easily.
Not only does every trader typically possess bad habits, but every person in general usually has bad habits they wish they could correct. When it comes to trading, it's so important to exercise good habits rather than strengthening and further supporting your bad habits. By doing so, you will be leading yourself to profitable trading sessions and the development of your overall trading performance.
Before you start trading, it’s important you become familiar and comfortable with some of the common lingo you will hear when you’re in the Forex industry. You want to not only understand what other traders in your community are referring to right off the bat, but you need to understand what your education and training is discussing without having to look things up.
Overnight positions are trading positions that are not closed by the end of the traders trading day. They're then held open for trading to proceed the following day. Overnight positions expose the traders to risk from adverse movements happening when trading closes for the night.
As a Forex trader, most of us have heard the motto “cut your losses short and let your profits run.” It sounds simple enough, right? Well, to be honest, it really isn’t if you’re not familiar with the very useful tool for all traders known as the trailing stop. The trailing stop is just like a typical stop and loss order with the difference being you can move it along with the market’s volatility.
Scalping and swing trading are very common ways to make your profits while trading. Each has advantages over the other and they have their disadvantages, too. No matter the type of trader you are, the other trading style still must be recognized as it can move markets in its own way and can catch movements that the other side would not catch. So, whether you trade like Shawn Lucas and scalp or if you do a longer term swing trade approach, knowing the difference and what they can add to your trading is important if you're adapting to the new strategy.
Pips are the most talked about thing in FOREX. ‘PIP’ stands for Price Interest Point or Percentage In Point and is typically the fourth number after the decimal point, unless you are dealing with the JPY, in which case it is the second decimal point. Pips dictate, along with the trade quantity, how much money you are making or losing in the market. Most every transaction measures its success or downfall in terms of pips as well. Pips are paramount in the FOREX market and Apiary Fund reviews their importance because of that throughout their education.
With all the difficulties that a new strategy can pose and the ever fluctuating markets in the foreign exchange market, backtesting a strategy when you start a new one or when looking at a new pair is important. You don’t want to have the win to loss ratio ratio or the best take profit and stop loss range for a pair with your specific strategy present itself only after you have entered a trade and had it run its course. Backtesting a strategy on a pair gives the ability to best suit your trading, this is the primary reason Apiary Fund puts such high stress on the idea of backtesting. Backtesting gives the opportunity to help a strategy grow and find ideal profits for your trading.
When you're talking about what pairs to trade, knowing what you're looking for is key. Without a specific goal in mind, there is no best pair. Apiary Fund reviews strategies for a wide range of different types of trading, each one of those has a best pair to use it with. That pair, however, can vary depending on time of day, time of month, and overall news in the market. Finding the easiest currency pair to trade will greatly depend on what you want to get out of the markets.