6 Important Tips for Forex Traders

Nial Fuller of Learn To Trade The Market outlines six quick tips for making more money trading currency.

Trading the forex market can quickly get out of control if you veer off course from your trading plan, or if you haven't yet found a trading strategy you are comfortable with. Also, many forex traders simply do not properly control their emotions as they trade the market, and this causes them to do things like over-trade and risk too much money per trade.

Whatever the reason for your problems in the market, in this article I am going to provide you with some quick tips for getting on a track toward profitable forex trading:

1. Trade from a Long-Term Perspective
Even the best traders in the world have losing weeks, but because they are consistent in their actions in the market, and because they understand that no one trade determines their success or failure, they typically make money every month.

In contrast, struggling traders tend to put too much emphasis on every trade. This is normally because they've risked too much money, but whatever the reason, you need to realize that no one trade determines your success for the month or year.

When you begin to think long-term and understand that what really matters is whether or not your profitable at year's end, you will stop getting emotionally attached to any one trade, and you will stop doing stupid things like trading when you know you shouldn't, or risking too much money per trade.

2. Understand That You Can Only Control Yourself
You cannot control the market, no matter how hard you directly or indirectly try. You need to understand that the market has no idea you exist; it is not a "living" entity and it doesn't care if you lose money on a trade, or on every trade.

What you have to do is learn to trade with the market and take what it gives you, and you do this by having a plan and then executing that plan. This is called "controlling yourself," and the more consciously and directly you control your actions in the market with logic and objectivity, the more money you will make.

Emotional traders are emotional because they try to force their will upon the market, and then they get angry or happy or sad depending on whether or not the market meets their expectations. You've got to understand that the market is an independent beast.whether you get stopped out by one pip or if your target gets hit by one pip, it was just what the market offered; it was nothing personal.

3. Become a Patient Trader
If you want to improve your Forex trading, you've got to understand the power of patience.

I did not "turn the corner" in my own trading until I finally realized that I didn't have to enter a lot of trades each month to earn a respectable return. Indeed, once I stopped over-trading and started being more patient and disciplined, my trading results took a dramatic turn for the better.

So, perhaps the easiest thing you can do to get your trading back on track is to simply calm down, take a deep breath, and accept the fact that trading less often (being patient) is probably going to make you more money over the long run.

NEXT PAGE: 3 More Tips for Forex Traders

4. Take Profits
Many beginning and struggling traders simply don't take profits, or when they do, their profits have become very small because they wait to take them until the market comes crashing against them.

You've got to ignore the feelings of hope and greed, and learn to take a decent size profit when the market offers it to you. There's nothing wrong with trailing your stop in a trending market to try and secure more profit, but if you are continuously taking small profits as the market comes back against your position, you have a problem.

I typically take a set 1:2 or 1:3 risk-rward, and I don't care if the market keeps moving in my favor without me because I am happy with making two or three times my risk per trade, and also because I know there will be other opportunities soon.

5. Start Focusing on the Daily Chart Time Frame
Too many traders become fixated on trading low time frames like the one-minute or five-minute charts. All these time frames do to newbie traders is induce them to over-trade and eventually lose money.

You need to focus on the daily chart time frame before you attempt trading any time frame below it. The reason is that the daily charts provide a much more relevant and smoothed-out view of the market, while still providing you with plenty of trading opportunities each month.

Low time frames contain a lot of market "noise" and non-meaningful price movement that will simply cause a lot of confusion and poor trading decisions to the untrained eye. Focusing on the daily chart was another key point that allowed me to get my Forex trading on the right track.

6. Truly Master Your Forex Strategy
Finally, the last tip I have for you is to make sure you've truly mastered your forex trading strategy before you attempt trading it with real money. I get a lot of e-mails from traders who tell me they are losing money or have lost a lot of money in the markets, but who also clearly have no trading strategy or system they've mastered.

You should never trade with real money unless you've seen consistent success trading your strategy on a demo account for at least three months. You should not trade the markets with real money unless you are 101% sure of exactly what your trading edge looks like and how to trade it. By having this certainty, it will naturally reduce your temptation to over-trade or to make "stupid" trades.

Not having mastered your forex trading strategy is exactly the same as a restaurant owner opening a new restaurant but not having any employees that know how to cook the food.they would lose money fast, and so will you if you are unsure about your trading strategy or have not fully mastered it yet.

Nial Fuller is CEO and founder of Learn To Trade The Market, the Web's foremost trading education community. Learn To Trade The Market is a global leader in forex trading education and training. The Learn To Trade The Market Forex Price Action Trading community has become a vital education resource for aspiring forex traders.