Trade active currencies and only when significant price change is occurring; trade in the direction the market is going.
Your maximum daily loss limit should be 2% of capital. This allows you to trade without fear or emotion; knowing that your worst day will not hurt you.
Be patient with winning trades. Don’t look for excuses to take profit; use trailing stops based upon a systematic formula for locking in profits.
Trade active currencies and only when significant price change is occurring; trade in the direction the market is going.
The shorter the time frame, the more random currency movements become. In the absence of news, don’t look for fundamentals reasons to justify holding onto a losing position.
Traders, like the market, have up-trends and downtrends; when your trend is up trade aggressively and when it’s down tread lightly.
If you get into a currency position at the wrong price and time, get out right. Getting in and out wrong is very expensive.
Economic news releases oftentimes create a move much greater than the news itself justifies. Get use to this, it’s the norm and not the exception.
Waiting is difficult and stressful when you have an
open position and the price is fluctuating in a narrow range. Get use to it; the market range trades 80% of the time.
Never, under any condition, add to a losing trade.
Don’t try to enter the market at the top or at the bottom, allow the trend to gain a foothold and join the move in progress.
Don’t
spread yourself too thin. Focus on one or two currencies and get to know them well.
Each currency has it’s own trading personality which must be learned from experience.
Trade where the market is going not what the price is; avoid thinking the price is too high or two low.
Always remain true to your trading plan. That means maintaining the discipline to control losses.
Keep it simple. The more indicators the more ambiguity.
Follow the market wherever it wants to go; don’t waste your time predicting where it will go.
It’s easy to take money from the currency markets; the tough part is not giving it back.
When everybody agrees you have the right position, you have the wrong position.
Take windfall profits whenever you can. If you put on a trade and get a quick 50 points take it.
Trade with your head. Not over it.
Note:
Jimmy Young is a seasoned institutional
forex trader having 20 years of experience with different banks. He headed up bank FX dealing rooms. He is FX profitability consultant to major European private bank. He manages funds and also trades personal money. Between 1981 and 2004 he was a foreign
exchange trader at following banks: Societe Generale, Julius Baer, Fuji Bank, Indosuez, Erste, Hill Samuel, Manufactures Hanover, Paribas, European American. www.EurUsdTrader.com
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