Follow the trends. This is probably some of the hardest advice for a trader to follow because the
personality of the typical currency and CFD trader is not "one of the crowd." These traders are
highly individualistic. It takes a special kind of person, not "one of the crowd," to earn enough risk
capital to get involved in these markets. So the typical trader must guard against their natural
instincts to be highly individualistic, to buck the trend.
Know why you are trading the currency and CFDs; to relieve boredom or to hit it big? Are you a speculator with high risk appetite or an investor or a risk neutral arbitrageur? When you can honestly answer these questions and honestly stick to your objective you may be on your way to successful trading regime.
Use a trading system, any system, and stick to it.
Apply money management techniques to your trading.
Do not overtrade. Control fear, greed and herd instincts.
Take a position only when you know where your profit goal is and where you are going to get out if the market goes against you. Stick to your plan.
Trade with the trends, rather than trying to pick tops and bottoms.
Don't trade many markets with little capital.
Don't just trade the volatile contracts.
Calculate the risk/reward ratio before putting a trade on, then guard against holding it too long.
Establish your trading plans before the market opening to eliminate emotional reactions. Decide on entry points, exit points, and objectives. Subject your decisions to only minor changes during the session. Profits are for those who act, not react. Don't change during the session unless you have a very good reason.
Follow your plan. Once a position is established and stops are selected, do not get out unless the stop is reached unless there is strong fundamental reason.
Use technical signals (charts) to maintain discipline - the vast majority of traders are not emotionally equipped to stay disciplined without some technical tools.
Use discipline to eliminate impulsive and herd behavioural trading.
Have a disciplined, detailed trading plan for each trade; i.e., entry, objective, exit, with no changes unless hard data changes. Disciplined money management means intelligent trading allocation and risk management. The overall objective is end-of-year bottom line, not each individual trade.
When you have a successful trade, fight the natural tendency to give some of it back.
Use a disciplined trade selection system: an organized, systematic process to eliminate impulsive or emotional trading.
Trade with a plan - not with hope, greed, or fear. Plan where you will get in the market, how much you will risk on the trade, and where you will take your profits.
Cut losses short - let profits run. It sounds simple, but it isn't. Many rather most of the traders have a hard time "cutting losses short." Cut the losses fast, before the losing position starts to infect you, before you "fall in love" with it. The easiest way is to inscribe across the front of your brain, "Cut my losses fast." Use stop loss orders. "Letting profits run" side of the equation. This is even harder because who knows when those profits will stop running? Well, of course, no one does, but there are few things to consider. First of all, be aware that there is an urge in all of us to want to win...even if it's only by a narrow margin. Most of us were raised that way. Win - even if it's only by one touchdown, one point, or one run. Following that philosophy almost assures you of losing. Here again, you have to fight human nature. Let's say you've had several losses and now one of your positions is developing into a pretty good winner. The temptation to close it out is universally overwhelming. When you are about to close out a winning position, ask yourself why. If the cold, calculating, sound reasons you used to put on the position are still there, you should strongly consider staying. Of course, you can use trailing stops to protect your profits, but if you
are exiting a winning position out of fear...don't; out of greed...don't; out of impatience...don't; out of anxiety...don't; out of sound fundamental and/or technical reasoning...do.
You can avoid the emotionalism, the second-guessing, the wondering, the agonizing, if you have a sound-trading plan (including price objectives, entry points, exit points, risk-reward ratios, stops, information about historical price levels, seasonal influences, government reports, prices of related markets, chart analysis, etc.) and follow it. Most traders don't bother. If you're like that and
trade futures for the fun of it, fine. If you're trying to make money without a plan - forget it. Trading a sound, smart plan is the answer to cutting your losses short and letting your profits run.
Do not overstay a good market. If you do, you are bound to overstay a bad one also.
Take your lumps; just be sure they are little lumps. Very successful traders generally have more losing trades than winning trades. They don't have any hang-ups about admitting they're wrong, and have the ability to close out losing positions quickly.
Trade all positions on a performance basis.
Program your mind to accept many small losses. Program your mind to "sit still" for a few large gains.
Learn to trade from the short side.
Most people would rather own something (go long) than owe something (go short). Markets give you opportunities on both long and short side. Therefore, can (and should) also be traded from the short side.
Watch for divergences in related markets - is one market making a new high and another not following?
Recognize that fear, greed, ignorance, generosity, stupidity, impatience, self-delusion, etc. can cost you a lot more money than the market's going against you, and that there is no fundamental method to recognize these factors.
Don't blindly follow computer trading. A computer-trading plan is only as good as the program. As the old saying goes, "Garbage in, garbage out."
Learn the basics of trading and the fundamentals of the products chosen for trading. Knowledge is always a good. It's amazing how many people simply don't know what they're doing. They're bound to lose, unless they have strong professionals with sound knowledge and experience to guide them.
Standing aside is a position. Patience is important.
Choose a broker who is compliance driven and uncompromising in risk management. A broker who is uncompromising on these aspects with you is also the same with other clients. An efficiently risk managed and compliance driven brokerage ensures its' own safety and therefore safety of your fund. One should not change its' trusted broker for a small rebate in commission.
Raise your valid concerns with Broker in time.
When you go stale, get out of the markets for a while. Trading currency, CFDs and other leveraged contracts are demanding, and can be draining - especially when you're losing. Step back; get away from it to recharge your batteries.
Thrill seekers usually lose.
If you're trading simply for the thrill of gambling, you'll probably lose, because chances are the money does not mean as much to you as the excitement. Just knowing this about yourself may cause you to be more prudent, which could improve your trading record. Have a business-like approach to the markets. Anyone who is inclined to speculate in futures should look at speculation as a business, and treat it as such. Do not regard it as a pure gamble, as so many people do. If speculation is a business, anyone in that business should learn and understand it to the best of his/her ability.
Approach the markets with a reasonable time goal. Don't just decide on the amount of money, decide on the length of time you should trade. This approach helps you conserve your equity, and helps avoid the Las Vegas approach of "Well, I'll trade till my stake runs out." Experience shows that many who have been at it over a long period of time end up making money.
Don't trade on rumors. If you have, ask yourself this: "Over the long run, have I made money or
lost money trading on rumors?" Stop it.
Beware of all tips and inside information. Wait for the market's action to tell you if the
information you've obtained is accurate, then take a position with the developing trend.
Don't trade unless you're well financed, so that market action, not financial condition, dictates your entry and exit from the market. If you don't start with enough money, you may not be able to hang in there if the market temporarily turns against you.
Be more careful if you're extra smart. Smart people very often put on a position a little too early. They see the potential for a price movement before it becomes real. They become worn out or "tapped out" and aren't around when a big move finally gets underway. They were too busy trading to make money.
Never add to a losing position.
Stay out of trouble, your first loss is your smallest loss.
Analyse your losses, trades and positions. Learn from your losses. They're expensive lessons; you paid for them. Most traders don't learn from their mistakes because they don't like to think about them.
Survival In currency, CFDs and other leveraged contracts trading is key to success; the ones who stay around long enough to be there when those "big moves" come along are often successful.
If you're just getting into the markets, be a small trader at least for a year, and then analyze your good trades and your bad ones. You can really learn more from your bad ones.
Carry a notebook with you, and jot down interesting market information. Write down the market openings, price ranges, your fills, stop orders, and your own personal observations. Re-read your notes from time to time; use them to help analyze your performance.
"Rome was not built in a day," and no real movement of importance takes place in one day. A speculator should have enough excess margins in his account to provide staying power so he can participate in big moves.
Periodically redefine the kind of capital you have in the markets. If your personal financial situation changes and the risk capital becomes necessary capital, don't wait for "just one more day" or "one more price tick"; get out right away. If you don't, you'll most likely start trading with your heart instead of your head, and then you'll surely lose.