How to make money from the forex markets


How to make money from the forex markets

Discipline

•Success will only happen for disciplined traders

•Do not guess or assume the market will move in one particular direction the second after you have placed your trade – the market will do what the market will do!

•Always use a stop loss and respect this – do not amend any stop loss unless advised to do so – and only to reduce risk!

•Do not spend the day looking at the screen – remove the stress

•Trading with a stop loss and  take profit targets should mean you only look at the trade once every 24 hours

•Do not chase any losses by increasing pip size to risk more than 3% of your trading bank

•There are good reasons why private individual traders will lose more than 90% of the time – make sure you are not one of them!

Do

•Follow the trades provided exactly

•Apply strict money management

Do not

•Amend trades unless advised

•Look at the markets when not trading

 Do not panic if a trade moves negative


Money management

•Always use the following technique to ensure correct money management

•Maximum financial exposure limited to 3% on bank

•Calculate price per pip based on stop loss

•Do not trade money you cannot afford to lose


How to calculate the right PIP size for you

Calculation of PIP price – Example 1

•This is how you calculate the PIP price for each trade to ensure you do not risk more than 3% of your bank:

•Assume a starting bank of £1000

•3% is £30

•Assume a stop loss for a trade of 70 pips

•£30 divided by 70 = PIP price of 42/43p

Calculation of PIP price – Example 2

•Assume bank has decreased to £900

•3% is £27.00

•Assume a stop loss of 50 pips 

•£27.00 divided by 50 = Pip price of 54p