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Customize your own trading system. There is no such thing as the Holy Grail in trading. There is no such a thing as the perfect forecasting system. Implement what works best for you. Select a model you are comfortable with and tweak it to your own parameters and stick to it. There are many systems available. What works for someone else might not work for you. You have to understand the underlying logic and be able to trade it comfortably. And never trade on rumors or tips; decisions should be based on your own research, analysis and judgment.
Stick to your trading system. Keep your emotions under control by following a trading strategy. When entering a position set up a trading plan: an entry point and a stop system for determining your exit. This will help you maintain control and minimize making emotional decisions.
Know when to take profit and when to cut losses: Holding onto a losing trade, hoping the price will go back up can be disastrous. Even the best trading system is not 100% right all the time. A good trading system has more winners than losers, and/or larger winners than losers. Using stops, either actual or mental is vital. For an excellent discussion of various stop strategies, refer to Chuck LeBeau’s presentation.
Determine how many positions you can comfortably monitor and do not take on trades in excess of that quantity.
Diversify to hedge potential losses and preserve capital. Never trade more than a small percentage of your capital in a single trade.
Avoid lightly traded markets. Stick to the popular heavily traded currency pairs such as USD/JPY, EUR/USD, GBP/USD, etc. Make good use of the high liquidity of the forex market. The less the participants in a currency pair, the harder it's going to be to liquidate your positions.
Never trade just for the sake of trading. Most trading systems do not provide “continuous advice.” Only take set-ups that meet your criteria. It is better not to trade than to place a losing trade.
Learn using paper trades. All traders have winning trades and losing trades. The objective is to keep the number and value of winners higher than the number and value of losers. Most forex brokerage firms offer free trading accounts to learn with. Take advantage of them and do not start to trade your own money until you have a system that is consistently profitable.
You never know it all so expand your knowledge base. The market is always evolving and you need to evolve too. There is a wealth of market-related literature—take advantage of it.
Try keeping a log of your trading activities. Learn from your past losses and wins. If you keep track of all your trades and note your decisions and reasons you should be able to learn from them.
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