Some things need to think for new Forex traders (2)

Trading for Wrong Reasons Because the EUR/USD is going up is not in itself a reason to buy. Buying EUR/USD because its not moving is even worse; youre paying the toll (spread) without even a hint that you will get a directional move. If you are bored, dont trade - the reason you are bored is there is no trade to do in the first place.

Getting Pumped Up The trick is to maintain an even keel. When you are in a trade, you want to think exactly as you would if you didnt have a trade on. To do this requires a relaxed disposition; this is not a football game. Dont get psyched up, relax and try to enjoy it.

Staying in the Game I dont recommend demo trading because traders learn bad habits when trading with play money. I also dont think letting it all hang out right away is wise either. Start off doing trades and taking risk that is relatively small but still makes a difference to you if you win or lose. About a quarter to a third of what you expect to reach as your trading matures is reasonable.

Trading Short-term Moving Average Crossovers This is the money sucker of the century. When the shorter term moving average cross the longer term moving average it only means that the average price in the short run is equal to the average price in the longer run. For the life of me I cannot understand why this is bullish or bearish. Easy to set up on software, complete with lights, bells and whistles, and good for the seller getting thousands for the software but in terms of creating profit, its a zero.

Stochastic Another money sucker. Personally I think this indicator is used backwards; when it first signals an overdone condition, thats when I think the big spike in the overdone currency pair occurs. To be overbought means strong and oversold means weak. Try buying on the first sign of overbought and selling on the first sign of oversold; youll be with the trend and likely have identified a move with plenty of juice left. So if %k and %d are both crossing 80, buy! (Same on sell side; sell at 20)

Rumors Rumors are rumors almost 100% of the time; think about where in the motion you heard the rumor. If EUR/USD is up 50 points in last 15 minutes and the rumor is dollar negative, well then you missed it. Whenever you trade, determine where in the motion you are entering.

Wrong Broker A lot of forex brokers are horrible; get a good one. Read forums and chats in several different places to get an unbiased opinion.

Simulated Results Watch out for black box systems; these are trading systems that dont divulge how the trade signals are generated. A great majority of them are absolute garbage. They show you a track record of extraordinary results, but think about it - if you could build a trading system with half a dozen filters using the benefit of hindsight, couldnt you too come up with a great system. Of course going forward is an entirely different story. High-speed number crunching capabilities allows for building great hindsight trading systems; BEWARE.

Inconsistency Every business (forex trading included) requires a business plan (trading plan). Unless you have taken the time to write down a set of rules that you can and will follow, its likely your trading will remain unfocused and directionless. Make a plan, have rules, follow them, set goals that are realistic, and you will achieve them.

Master of None Focus on one currency for technical trading. Each currency has a unique way of trading and unless you get intimate with it, you will never truly understand its underlying idiosyncrasies. Dont spread yourself too thin. Focus  master one currency at a time.

Thinking Long Term Dont do it. Stay in the moment. Especially if youre a day trader. It doesnt matter what happens next week or next month, if you are trading with 30 to 50 point stops restrict your thought process to whats happening right now. That is not to stay the long-term trend is not important; it is to say the long-term trend will not always help you when you are trading in a significantly shorter time frame.

Overconfidence Trading is not easy; statistics show a 95% failure rate. If your doing well dont take your success for granted; always be on the lookout for ways to improve what youre doing.