In this Forex video, I will be sharing three Forex trading lessons. The idea for this video came when a trader that was seeking advice left a comment on my YouTube channel. This Forex video is meant to get traders to think about three things: account size, the trend, and profit targets. While I hope to answer some of the questions, you may have in this video. I will be expanding on these topics in future videos and hope to cover each of these three topics in even greater detail.
Forex Lesson #1
It is possible to start trading with a small account size of $1,000, as long as you pay close attention to position size. Too many new traders come into the Forex market and think they will get rich quick when they start their trading account with $1,000 or less. However, this mindset can cause new traders to use too large of a position size as they chase massive profits. In the Forex market, you make money by using proper money management and discipline. A trader should not grade themselves on their profit or loss, but rather on how well they executed their trading plan.
Forex Trading Lesson #2
One of the most important Forex trading lessons that I have learned is trading with the trend. If you know, even just a little about the financial markets, chances are that you have heard the term “trend.” Maybe you have also heard the phrase “the trend is your friend until the end.” I use the trend or market direction to point me in the right direction when I place a trade. I don’t, however, see an uptrend and buy. I look for a retracement and then for the currency pair to meet my rule set before I enter the trade. I have learned over the years that trading in the direction of the overall trend, makes hitting larger profit targets much easier. When you fight the trend, your potential profit range is reduced because the swings tend to be smaller in size.
Forex Trading Lesson #3
When using a profit target on multiple time frames, it must be adjusted. A lot of traders attempt to use the same size stop loss on a one hour chart that they use on a five minute or fifteen-minute chart. This method is not suitable for most traders because swing points on a five-minute chart tend to be much closer to each other than on a one hour chart. Before you decide which time frame chart to trade on it’s recommended that you backtest those results to see which stop loss size is best for the set-up that you plan to trade.
Forex Trading Lessons Video
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