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Another advice for beginners at Forex

Hi, guys! As we've promised last week, we continue publishing our active trader's advice to newbies on Forex. Today we are glad to post very useful and extremely interesting 6 basic tips of Forex trading, given by one of our successful and experienced Forex signals providers called AdvancedProfits. We hope that will do much good to all Forex beginners.

  1. The first and the main point is, that a Forex trader MUST follow his own money-management rules. That's the basis of trading. Without following that rules you can quickly lose the deposit. I recommend holding positions on the market with total sum of 5-7% of the capital.
  2. Don't enter the Forex market with all your funds at once. That's quite risky thing, you know. If the situation on the market keeps being good, you can increase the volume of your position in order to get more profit.
  3. Don't trust to luck and wait, when the situation on the Forex market changes, if your position is unprofitable. If you see, that your prediction was wrong close your positions. Don't wait for profit to rise to +1, because it can easily turn out to fall down to -300. As a rule, that's the main mistake done by beginners.
  4. Analyze your Forex trading every week. Find out the reward ratio of your trading system (reward ratio is the risk you take compared to the potential reward. for example, if your TP is 100 pips and SL is 10 pips, reward ratio is 10/1). To my mind the ideal reward ratio is 3/1. Minimum acceptable reward ration is 1:3. If that parameter is smaller, you've probably got to the category of people mentioned in the point #3. It's necessary to control your stop-losses very strictly. At the same time you should let your profit grow, when the situation on the market is good.
  5. A Forex trader should be also a good psychologist. Don't try to repeat the actions of the majority of the traders. That majority can often be wrong. Everybody knows, that only 5% of traders get profit at Forex market. So, there's nothing amazing in your doing something against predictions of the majority.
  6. Finally, have patience and diligence. After making up a plan and setting targets remain calm and just wait.

Good luck to all!

August 10, 2009

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