Wednesday, February 24, 2010

10 Tips

Trading by Numbers

01: Pay attention to the market. Exit and enter trades based on market information. Don’t wait for a price you think the currency should hit when the market has changed direction on you.

02: There are times when, due to a lack of liquidity or excessive volatility, you should not trade at all. On a similar note, never trade when you are sick. You can’t count on yourself to be alert to the shifts of the markets, and make good decisions.

03: Trading systems that work in an up market may not work in a down market, and a system that works for trending markets, or for range bound markets may not work in other markets. Have a system for each type of market.

04: Up market and down market patterns are ALWAYS there, but you have to look for the dominant trends. Always select trades that move with the trends

05: During the blowout stage of the market, either up or down, the risk managers are usually issuing margin call position liquidation orders. They don't generally check the screen to see what’s overbought or oversold; they just keep issuing liquidation orders. Make sure you stay out of their way.

06: Trust your instincts. If something feels wrong about a trade, don’t make it. It’s better to be superstitious than to loose money.

07: Rumour is king. Buy when you hear the rumour, sell when you hear the news.

08: The first and last ticks are always the most expensive. Get in the market late, and out early. And never trade in the direction of a gap, either opening or closing.

09: When everyone else is in, it's time for you to get out. If a stock or currency is overbought, it’s time to exit your position.

10: Don’t worry about missing out on an opportunity to trade. There will always be another good one just around the corner. If the trade you are considering doesn’t meet all your entry signals but it seems to good to pass up, remember, you’re never going to run out of trades you can make.