Practical Forex Tips 

This page contains a comprehensive list of hands-on practical forex tips for executing trades on the spot forex market These free forex tips are dynamic and have been rewritten several times based on the input of our experienced client base. Each tip is meant to introduce traders to a new topic, more information about all of these topics is available on our website.

Tip 1 - Always trade in the direction of the trend. The foreign exchange is a large market and the trends, momentum, and movement cycles tend to last longer than other financial markets. If you don't know the trends of the market or consistently trade against them it will cause pain and losses. We provide all forex traders with easy to set up trend indicators and actively promote trading with the trend.

Tip 2 - Always trade with a stop order, not because you expect to lose, but to prevent a large loss from an unexpected news event like a currency devaluation, terrorist attack, tsunami, or some other unexpected worldwide event. Nobody can predict tomorrow. These very market conditions may even prevent a stop order from being executed exactly where you place it. Please consult with your broker on their written policies and details of how they execute stop orders.

Tip 3 - Another one of our great forex tips is to know the currency pairs you trade. Most traders trade one or two pairs. Since we trade 28 pairs there is a bit of a learning process, but the profits are higher with more pairs. Some currency pairs move fairly slow and some move extremely fast. Learn more about currency pair characteristics like volatility, spreads, as part of your overall learning about the forex market.

Tip 4 - After you enter a trade you can use these guidelines and forex tips for initial stop order placement. Initial stops for slower moving pairs should be in the range of 20-25 pips. Just verify where the pair was trading as it was consolidating in the last few hours before the current movement started using a conventional bar chart found on most brokerage platforms. You can also check the free forex trend indicators.

Look at the recent  "lows" and "highs" on the smaller time frames, like the M15 time frame, on the free trend indicators established in the last few hours prior to the start of the movement. Initial stops for buys should be placed immediately below the recent lows as the pair was consolidating for the last few hours of trading prior to the upward movement starting.

Initial stops for sells should be placed immediately above the recent highs as the pair was consolidating for the last few hours of trading prior to the beginning of the movement to the downside. For more volatile currency pairs you can add 5-15 pips to your initial stop, initial stops on these pairs would be 30-40 pips. These are excellent guidelines for new traders but more experienced traders will modify these initial stop guidelines as they develop some experience.

Tip 5 - All forex tips related to money management are useful. Always know your money management ratio or risk /reward ratio for each trade you take. If a trade has 100 pips of potential and you enter the trade with a 30 pip stop at the outset, then the money management ratio is 100/30 or 3.3 to 1 positive. The higher the money management ratio, the better.

Everyone has losses. It's going to happen. Just keep them small and manageable and with the proper ratio of wins and losses and the proper money management ratio and you will be fine. You will get stopped out at some point, its a fact of life and part of trading. But even with a 50% success rate and the proper money management ratio your account will grow. Some spot forex trades that we point in our trading plans have money management ratios of 15-20:1, which is excellent. We trade the forex using swing to position style and only take shorter term trades when the forex market conditions dictate this. This is one of our most valuable forex tips.

Tip 6 -  Price warning alert should be part of your trading plans so that a price alarm point at a critical area of support and resistance on the currency pairs you track. The reason for this is that you want to intercept the price movements but spend less time in front of the computer.

Tip 7 - Many forex traders try to do too much in their life and they lose a lot of sleep and it sometimes winds up costing them their health. Its not worth it to trade under these circumstances. Consider getting a trading partner and opening up a joint account with them. Make sure your trading partner likes trend trading also and that you both think alike. You can meet online in a chat room or Skype daily and discuss trades. Make the forex a great part of your life and keep a good balance. The forex should never be a chore. If you review Lesson 14 in our training package it gives you more forex tips about the best times to trade the forex market for efficiency.

Tip 8 - Entry management is one of the pillars of forex trading. You may want to check a tool called Forex Heatmap to verify the entries on all trades and you will  have a distinct advantage over other traders. the tool confirms your entry because you are buying the strong and selling the weak currency.  . 

Tip 9 - If you have any currency pair that has moved strongly in your favour you can close out half of your lots, the "rule of thumb" you should use,  adjust your stop order on the remaining lots to break even and let the remaining lots ride on the larger trends if they are strong. If you choose to close out a portion of your lots after a strong move you can do so at the end of the USD session in an approximate window of time around  10 - 11:00 am Eastern Time.

This is generally when the pairs end their moves and start to consolidate. Your general idea is to get your stops to break even then let the trend do the work. On any strong positive trades close out half of your lots and let the rest ride with the trend, another general rule of thumb. Scaling out lots should be  one of your most logical forex tips, and a great scenario for any profitable trade.

Also Read: Three Steps To Eliminate Trading Negative Pattern

Tip 10 - To trade the forex market you must have a trading system that works. Second step is to learn the system well and demo trade, to make sure the system works for you and your schedule. This is true for any trading system including Forex early warning  price level alarm in your trading platform. It will alert you when price reaches a certain level that coincides with your entry strategy.

Tip 11 - When you buy or sell a currency pair you are paid or charged interest daily based on current worldwide interest rates across each region. The daily rollover interest, or swap, is paid into your accounts or removed daily based on the spot forex positions you are holding. When you paper trade see how the interest accumulates or is debited daily from your account. On certain pairs extra interest income can be accumulated over time, this is called a carry trade. Another one of our valuable forex tips.

Tip 12 - There are times in your life when you should not be trading. When you are sick, distracted, have family issues, computer issues, or when you are dead tired.

 Admit it and trade when you are in the right frame of mind and the other important phases of your life are in order. Make the forex an important and positive part of your life and enjoy the other phases of your life equally. 

If there are no trades available taking a break from trading and the computer is good, spending time with family and hobbies will keep you well rounded in all phases of life and when you come back to the computer your mind will be refreshed and ready. This is one of the best forex tips we could suggest.

Tip 13 - At some point in your trading career, the electricity will go off, the internet will die, your software or trading platform will not be working, etcetera.

 Plan in advance for these types of problems and always use stop orders, a set of backup conventional price charts, backup trend indicators, backup forex quote system or website,  smartphone, keep brokers phone numbers handy and programmed into your phone, etc. Always have a contingency plan in place or backup systems for your hardware and trading systems in place. Do not find out the hard way and blow up a trade.

Tip 14 - Some conventional chart patterns are very important and can help you to be a much better trader. Focus on how to read forex chart patterns like pennants, flags, double tops, double bottoms, ascending and descending wedges, and oscillations. These chart patterns easy to recognize and occur frequently on the currency market, they can also help to confirm your trend direction.

Tip 15 - When using forex economic news calendar to trigger a trade entry make sure you have a trading plan in front of you and only trade news in the direction of the trend like your plan says to. If The Forex Heatmap® indicates a trade against the trend just remember that this may likely be a short term trade. Following the news calendar is one of our most valuable forex tips because so few traders know about it.

Tip 16 - Currency trading is a step wise process, first you demo trade our trading plans using The Forex Heatmap® to guide your entries. If these trades go well, then start trading with micro lots or fractional mini lots, then build up to one mini lot, the multiple mini lots and then ramp up over time to multiple mini lots and beyond to full scale trading and regular lots.

 Build confidence as you go and don't expose yourself until you have your entry procedures, experience level and profit taking procedures down well. There is no substitute for experience and trading experience cannot be taught.

Tip 17 - Learning to be a longer term trend trader and managing your forex trades differently is not difficult. Any trader can do this, which is one of our easiest forex tips to execute. If you get into a nice trade with a lot of positive pips you can always take some profit by closing out half of your lots using the "rule of thumb". 

 If the longer term time frames and trend indicate a solid forex trend just hold onto the rest of your lots with a break even stop and move the stop or scale out more lots as you go deeper into profit. We will identify the trends and entry points, so you can teach yourself to be a longer term trader. Let the forex market do the work for you.

Tip 18 - Trade only with the trend and market momentum of the spot forex. The forex is a massive market and the trends must be respected. To help you give you a mindset for being a trend trader all traders should consider reading the book by Michael Covel titled "Trend Following".

Tip 19 - Valuable forex tips would include not letting the forex rule your life. you are in charge. Don't stare at the computer all day and all night. Always have a trading plan, yours or ours, and utilize all of our alert systems to trade the forex market in a time efficient manner. 

Tip 20 - All currency pairs are either trending or ranging all of the time in some form or fashion. Trending is a strong directional move up or down, oscillating is up and down movements and going sideways within a support and resistance trading range. 

You should always trade in the direction of the trend but if a pair starts oscillating in a large range, you should hold trade so long. When trading a ranging market the trade duration might be shorter term movements and you must enter and exit somewhat more frequently unless the oscillation cycles are on the H4 time frame or larger.

Tip 21 - Always trade a number of lots you are comfortable trading, some people are demo trading the spot forex, some are trading micro lots, others trade mini lots, and still others regular lots. Always know yourself emotionally.

 As you get more experience the right trade will come along and you will automatically know when to increase the number of lots on entry. Experience is the key it will happen naturally. Valuable forex tips: Start by demo trading and then micro lots, then measure your emotional reaction as you increase lots over time.

Tip 22 - Individual currencies drive the market movements, not indicators, to match this you have to analyse individual currencies daily and get rid of all of the technical indicators that have failed forex traders for years. Don't trade indicators trade currencies. Do not rely on indicators, if you must use it you rather use it for confirmation.

Tip 23 - Set up some rules for trade entries, nothing complicated just 3 or 4 rules so you are consistent. This, along with a couple of rules for money management and you will start making pips much more consistently and avoid bad trade entries.