Please pay attention that the below recommendation is an opinion of one of our traders. Please build your trading plan based on your trading goals and with an account of information from various sources.
Forex trading as your job
Forex trading is a one of the best opportunity to make money. Unlike other markets, it is opened 24/7 and trillions of money units are traded in a day. There are plenty of brokers providing low spread and high leverage which is more encouraging for the beginners.
Emotion control and patience
Making money in Forex is not that easy – by saying so, we mean making a consistent profit. We have to control our emotions. We are getting greedy immediately after making profit and place orders over and over without any trading plan. It is an addiction and happens once you see your account balance is positive.
One of the main qualities for a Forex trader is Patience. We should stick to a trading plan and control our emotions every day. We should not plan to take all from the market, we are here for a small piece from the price fluctuation. It is very difficult to stick to this attitude, but practice makes perfect. Once we keep on doing the same, our subconscious mind would automatically place the right order.
Do not pressurize yourself or fix any targets in trading. Just trade and stick to your plan. Your mind should be fixed and never panic thinking about something. Making a consistent profit in first few weeks and losing everything at end of the month makes no sense. Your only power in making good result is to limit yourself in placing few trades in a day and not let your mind oscillate. If your mind is not clear, trading that day. Also avoid trading on the day when you make a loss.
Trading on high/low volume
My personal advice is to not trade when there is high/low volume. It is very dangerous to trade immediately after news release because huge volume and enormous money would be flowing into the market. Also it is not advisable to trade when volume is low. It is enough to trade only EUR/USD on UK and US session. Trading from 3am to 12pm Eastern Time (9 hours) is more than enough.
Indicators in trading
Profits are not fixed in forex trading. Market doesn't react same every day. We're the people who move the market. Sticking to technical analysis is a better strategy than news trading. For example, use Stochastic Oscillators and Bollinger Bands. First we should understand when, according to this type of analysis, is this the right time to enter the market and place an order. We can easily find out this point by checking Bollinger band's width.
Bolliger band works like a Hollow pipe full of water and if the pipe leaks or break water, flow out. So if the market breaks the we can place a short on that direction. I would always prefer scalping. Please do not go for long and never see chart greater than 1 hour when the market is active. Avoid trading if price fluctuates for It is more safe to trade when Stochastic is straight up/down and not when it is above 80 or below 20 which means Overbought and Over Sold respectively.
Frequency of trading
Coming to the leverage, we can easily use 1:300 leverage for scalping and even sometimes 1:400 but never aim for more than 6 pips in any trade. Also never hold any trade for more than 10 minutes. Scalping targets small profits with high leverage in a short period of time. There are some robots which place 1000 of orders in a day with just 0.5 pip profits. Some high frequency traders monitor this with more efficient and expensive computer programmings. They place these orders in nano seconds near to the data centers.
We don't need to be a robot placing thousands of orders. It is more than enough if we do with 3 trades in 9 hours each day. Trading turns to be an addiction once we make couple of profits. But we can manage and handle this only by restricting ourselves to something. Our emotion changes once we sit in front of chart for a long time or after making few profits or losses. We should restrict ourself by placing limited orders in a day so that we do not over trade and also we stick to our trading plan.
I would advise you to divide the time frame into four. That is 1)3AM to 5AM, 2)5AM to 7AM, 3)8AM to 10AM and 4) 10AM to 12PM according to the Eastern Time. One order on each time frame is more than enough. Never place more than 5 or 6 orders in a day. Try to satisfy yourself even if your shutting down with three successful trades.
Some days will not be favorable for us - especially Monday or Friday. Investors would be waiting for news release on the week start and they would be rushing in closing their positions on week last day. Usually on Mondays there will not be much of volume and market moves hugely in one direction on Fridays. In this case Stochastic Oscillator in hour 1 chart would be either above 80 or below 20.