Identifying Currency Trading Opportunities and Creating Trading Plans
Part of the Currency Trading For Dummies Cheat Sheet
Identifying trading opportunities and planning each trade from start to finish is essential to success in currency trading. When you trade currency as an investment tool, remember to:
Maintain trading discipline by formulating — and sticking to — a complete trading plan: position size, entry and exit (stop loss and take profit) before you enter a trade.
Always trade with a stop-loss order. Decide on the stop loss before you’re in the trade and don’t move it unless it’s to protect profits.
Identify trade entry and exit levels in advance through technical analysis.
Understand how each currency pair’s prices move and what drives the prices.
Determine position size based on the trade setup and your financial risk-management plan.
Be patient — currencies move around a lot. Wait for the market to allow you to enter your trade strategy.
After you’ve invested your time, energy, and risk capital in a trade, your work has only just begun. Managing your trade while it’s active is just as important to a successful outcome. Stay alert, be flexible, but stick to your trading plan.