Spot Forex & Commodities – Trading Principles

From Forexyard:

  • Have a clear strategy before you initiate a hedge trade. Hedging should be regarded as shot term trading strategies.
  • Make sure to have clear technical and fundamental indicators before going into a trade
  • Always control your leverage and make sure you have sufficient margin in the account with the leverage tool (trading amount)
  • Always use stops and limits
  • Learn how to use trailing stops and oco’s and how to utilize them in your trading activities
  • In spot forex, you don’t want to keep your position open for over 72 hours. Most trades should be for a few hours or if the markets are volatile, a few minutes.
  • The more equity you have in the account, the better you are positioned in the market, if it’s flexibility in margin, leverage and be able to ride off temporary drawdowns.
  • Important technical indicators: Stochastic Slow, MACD, RSI and Bollinger Bands.
  • Every instrument needs to have 4 charts: 5 minutes, 15/30 minutes, 1/4 hours and the daily chart. If you want to look at long term trends, have the weekly chart open as well.
  • Try to keep your equity level % over 250%. To view your equity levels, simply click on windows and select accounts. Scroll to the right until you see the equity level % column.
  • There is a strong positive/negative correlation, sometimes up to 90% between currency pairs and between currency pairs and other trading instruments such as equities, bonds/notes as well as commodities have a strong correlation, the % level mostly depends on market conditions as well as the.  In some market conditions we can expect negative correlation with USD/Gold, USD/Equities….

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Wednesday, March 10th, 2010 Currency Exchange, Trading Strategy, currency trading

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