Common Sense Guidelines for the Average Trader

Look for a reputable brokerAbility to trade effectively depends on consistent spreads and ample liquidityAnyone can establish a positionAbility to close out a position at a fair market price is more importantLive to trade another dayApply prudent money management skillsAvoid using excessive leverage that puts your investment capital at riskAlways trade with a stop!Don�t trade emotionally, stick to your plan and maintain disciplineEstablish a trading plan before initiating a tradeSet reasonable risk/reward parametersDon�t override your stops for emotional reasonsDon�t react to price action � means don�t buy just because it looks cheap or sell because it looks too high, Have supporting evidence to back up your tradeDon�t puntDon't punt ( Punting is trading for trading sake without a view)Don�t leave stops at obvious levels such as �big figures� (e.g. eur/usd 1.20, usd/jpy 110)i.e. JUBBS stops = stops at obvious levels and thus are more likely triggeredDon�t add to a losing position in unless it is part of a strategy to scale into a positionIn other words, don�t double up in the hope of recouping losses unless it is part of a broader trading strategyTrading with and against the trendWhen trading with a trend, consider the use of trailing stops.When trading against the trend, be disciplined taking profits and don�t hold out for the last pipTreat trading as a continuumDon�t base success on one tradeAvoid emotional highs or lows on individual tradesConsistency should be an objectiveForex trading is multi-currencyWatch crosses as they are key influences on spot tradingCrosses are one currency vs. another, such as eur/jpy (euro vs. jpy) or eur/gbp (eur vs. gbp)Crosses can be used as clues for direction for spot currencies even if you are not trading themBe cognizant of what news is coming out each day so you don�t get blindsidedBe cognizant of what news is coming out each day so you don�t get blindsidedBeware of trading just ahead of an economic number and be wary of volatility following key releasesBeware of illiquid marketsBeware of illiquid marketsAdjust strategies during holiday or pre-holiday periods to take into account thin liquidityBeware of central bank intervention in illiquid marketsJay Meisler, a partner in Global-View.com, says one problem of trading with too-high leverage is that one piece of surprise news can wipe out one's capital. "Those who treat forex trading as if they were in a casino will see the same long-term results as when they go to Las Vegas," he says, adding: "If you treat forex trading like a business, including proper money management, you have a better chance of success." �Newsweek International, March 15, 2004Treat this business as a marathon and not a sprint so you avoid burnout and maintain stamina for the long haul.