Guidelines for Average Trader

gauria123

Common Sense Guidelines for the Average Trader

Look for a highly regarded broker

• Capability to trade efficiently depends on steady spreads and sufficient liquidity
• Anyone can set up a position
• Capability to close out a position at a fair market price is more important

Stay to trade another day

• Apply careful money running skills
• Avoid using extreme leverage that puts your asset capital at risk
• Use of stop loss

Don’t trade psychologically, stick to your chart and uphold discipline

• Set up a trading map before initiating a trade
• Set sensible risk/reward parameters
• Don’t supersede your stops for touching reasons
• Don’t act in response to price action – means don’t purchase just for the reason that it looks contemptible or sell because it looks too high, Have sustaining evidence to back up your trade

Don’t punt

• Don't lash out( Punting is trading for trading sake without a view)

Don’t depart stops at clear levels such as “big figures” (e.g. eur/usd 1.20, usd/jpy 110)

• i.e. JUBBS stops = stops at obvious levels and thus are more likely triggered

Don’t put in to a losing point in unless it is element of a approach to scale into a position

• In additional words, don’t twofold up in the hope of taking back losses unless it is division of a broader trading approach

Trading with and against the trend

• When trading with a trend, consider the use of trailing stops.
• When trading against the trend, be disciplined taking profits and don’t hold out for the last pip

Treat trading as a continuum

• Don’t base success on one trade
• Avoid emotional highs or lows on individual trades
• Consistency should be an objective

Forex trading is multi-currency

• Watch crosses as they are key influences on spot trading
• Crosses are one currency vs. another, such as eur/jpy (euro vs. jpy) or eur/gbp (eur vs. gbp)
• Crosses can be used as clues for direction for spot currencies even if you are not trading them

Be cognizant of what news is coming out each day so you don’t get blindsided

• Be cognizant of what news is coming out each day so you don’t get blindsided
• Beware of trading just ahead of an economic number and be wary of volatility following key releases

Beware of illiquid markets

• Beware of illiquid markets
• Adjust strategies during holiday or pre-holiday periods to take into account thin liquidity
• Beware of central bank intervention in illiquid markets