Five Beginners Lessons in Forex Trading
I’m a day trader. Or rather I aspire to be a day trader. Every day I trade the foreign exchange (forex) market, but, until recently, I haven’t had much success. Then I met some folks on Twitter who made all the difference for me.
I’ve spent the last few weeks in a trading room presented by Casey Stubbs (@caseystubbs) of Winner’s Edge Trading and moderated by Michael Storm (@neo761). Michael is a long-time professional trader known as Robin Hood in trading circles (he takes from the rich and gives to the poor.) He taught me these five lessons for successful forex trading:
Support and resistance on a trading chart are not precise numbers, but rather areas. Part of my profitability problem in trading was that I was taking trades based on a bounce from a precise number and placing my stop loss just past this precise number on the chart. Invariably, the market moved just past the precise number, precisely taking out my stop loss and then proceeding to move in the direction I expected without me. I’ve learned to watch for candlestick confirmation of a turn in the market before entering a trade.
Pigs get fed, hogs get slaughtered. When you get some profit on your trade, don’t let it turn and go negative on you. “Peel” some of the profit off by closing a portion of your position. That’s the getting fed part. If you just expect the trade to run and you get greedy, you’re going to get slapped. That’s the slaughtered part. In business school we used to say “the time to get pie is when pie is passed.” Get the pie while it’s in front of you. Don’t let it get away.
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