Incisive market commentary from David Morrison

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Tory Poll Lead Narrows Sharply - Video Update
31 May 2017
S&P 500 and NASDAQ break winning streak
31 May 2017
Sterling swings on polls - PM Bulletin
30 May 2017
Equities drift after long holiday weekend - AM Briefing
30 May 2017
Crude oil slumps on OPEC disappointment - AM Briefing
26 May 2017
OPEC disappoints while FOMC minutes provide cheer - Video Update
25 May 2017
OPEC expected to agree 9-month extension - AM Briefing
25 May 2017
Look-ahead to OPEC - Video Update
24 May 2017
Markets quiet ahead of FOMC minutes and OPEC - AM Briefing
24 May 2017
Crude oil update - OPEC meeting in focus - PM Bulletin
23 May 2017
Markets shrug off atrocity in Manchester - AM Briefing
23 May 2017
Equities mixed, but supported by oil
22 May 2017
Nerves steady after firmer close on Wall Street - AM Briefing
19 May 2017
Political fall-out continues to weigh on markets - Video Update
18 May 2017
Slide in European indices accelerates - AM Bulletin
18 May 2017
Trump’s woes hit markets - Video Update
17 May 2017
Trump’s woes lead to market wobble - AM Briefing
17 May 2017
EURUSD hits six-month high - PM Bulletin
16 May 2017
Crude oil extends rally - AM Briefing
16 May 2017
US inflation data and retail sales in focus - AM Briefing
12 May 2017
Crude oil recovers after “flash crash”- Video Update
11 May 2017
Crude oil soars while equities drift - AM Briefing
11 May 2017
Are investors too complacent? - Video Update
10 May 2017
Investors rattled after Trump fires FBI head - AM bulletin
10 May 2017
Crude oil’s “flash crash” leads to OPEC desperation - PM Bulletin
09 May 2017
Equities rally as oil steadies - AM Briefing
09 May 2017
Forex: Top Ten Tips for beginners - Trading Guides
08 May 2017
Markets little moved after Macron win - AM Briefing
08 May 2017
Payrolls in focus - AM Briefing
05 May 2017
NFP look-ahead - Video Update
04 May 2017
FOMC hints at rate hike in June - AM Briefing
04 May 2017
FOMC look-ahead - Video Update
03 May 2017
Apple disappoints on sales numbers - AM Briefing
03 May 2017
CFD Trading Tips - Trading Guides
02 May 2017
European traders return after May Day - AM Briefing
02 May 2017
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1. FX is typically traded on margin. This means you only put up a small percentage of the value of the underlying contract to control a large amount of it. Your trades are leveraged meaning that your potential profits, and losses, are magnified. It’s very important to understand this before you begin trading.

2. Without wanting to sound too negative, here’s a wealth warning: only trade with money you can afford to lose. Obviously the reason we all trade is to make money, but it is important to be realistic as well. Every trader gets it wrong from time to time, especially when they are starting out.  The trick is to make sure that your losses are limited and consequently won’t take a big chunk out of your risk capital.

3. Work out what kind of trading suits you best. Many FX traders take positions that they only anticipate keeping open for a short time - a couple of hours or maybe even less, and never running positions overnight. This is called “Day Trading” - but it’s not for everyone. After all, you need to devote a lot of time to this unless you fully automate your trading. But it’s quite possible to have a successful and fulfilling trading career without staring at screens all day. So decide how you can fit in your trading around your normal schedule.

4. Whatever the timescale of your trades, begin with small stakes - something that is quite easy to do with FX. Start with the smallest trade or bet size possible, and make sure you understand how much you stand to win or lose with each tick movement (a tick is the minimum price fluctuation).

5. Undertake money management by organising your risk capital. Divide it up into small tranches to make sure you don’t risk too much per trade. Obviously, the more tranches you have the more opportunities you will have to trade. But you have to offset this with the fact that the smaller each tranche, the more difficult it will be to find suitable trades, bearing in mind where you place your stop losses.

6. Follow just a few currency pairs to start with. It may be best to stick to the most popular and liquid ones initially rather than obscure and volatile cross-rates. Keep an eye on the charts and use a combination of drawing tools and technical indicators. Drawing tools can be as simple as horizontal or trend lines to help highlight areas of support and resistance. But then try adding in some moving averages - the 10, 20, 50-day for example. Technical indicators such as the RSI or MACD can help highlight when a currency is overbought or oversold. Back-test, and see what works best for you and specific currency pairs.

7. Develop your own trade ideas and don’t be tempted to take a position on the basis of a tip from someone else. By all means, use tips as the starting point for further investigation, but do your own homework and make sure you’re relaxed about the amount of risk you’re taking on a trade.

8. Plan your trades carefully. Work out how much you’re prepared to risk on each trade and place your stop accordingly. If it looks as if you have to put your stop at such a level that you could potentially lose more than you’d planned for through your money management, then don’t do the trade. This should help to take the emotion out of trading.

9. Don’t move your stops further away, and don’t be tempted to add to a losing position. Stick to your trading plan while your trade is open. Only amend it later when you can study the market dispassionately. Remember: it’s difficult to think objectively when you’ve got a losing trade, so stick to your rules as it helps to impose discipline and keep the emotion out of your trading.

10. Keep a trading diary and take notes on all your trades - the winners and the losers. Try to identify what worked on the good trades and what didn’t on the bad ones. It can be painful revisiting the failures, but often this is the only way to learn and improve.


Spread Co is an execution only service provider. The material on this page is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by Spread Co Ltd or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


Posted by David Morrison

Tagged: Trading Guides

Category: Trading Guides

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