Stop losses: Forex Trading Book

Your strategy must include a stop loss, measured in terms of pips. You can learn more about stop losses by reading a good forex trading book. Again you must consider the risk that you are taking as a proportion of your overall funds. In most cases you should target for a risk of around 2% for every trade. However, with a number of systems or if you have a very low initial pot, you could want to go higher than that to get around your stop loss being triggered too often. Just be wary that if you do that, you have a greater chance of going bust. You can

You must also establish the exit place for a winning trade, i.e. how many pips you are aiming to achieve. If you do not establish this you will often be tempted to hold out as long as possible, praying that the trend will remain your way. Often times you will be caught out by a unexpected reversal and a profitable trade can be turned into a loss. So it is very crucial to decide ahead of time how much profit you will take.

Once you have your forex trading strategy, it is crucial to keep to it consistently. Avoid the temptation to trade when the signals are not quite right, or to stick to your gut feelings in anything, at least until you have many years’ experience of the market. Also, reduce interruptions whilst you are trading. This will help you to stay away from making unwise mistakes and keep you concentrated so that you can make the best of all of the forex trading information that you have acquired.

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