I have come to the conclusion that the key to succeeding in forex trading is to understand what makes the market move. By that I mean to say it’s important to have a good idea of where each currency stands, not just the currencies on which you are focused but the other major currencies as well. Because changes in the value of one currency in relation to another can be affected by changes in the value of an unrelated currency.
This means that you need to be aware of what is going on with the economies of the countries that hold the world’s major currencies and you need to know what things will cause currency value to rise and fall from moment to moment and how news coming out of one nation will impact on the currency of all the other majors.
This of course will not result in trading sucessfully 100% of the time; but it will enable you trade more confidently.
In my first week of live trading I traded in a manner similar to tossing up a coin. And most of the time if I went with heads it came up tails. If I went with tails it came up heads. I lost money. Trading forex is not about gambling on odds. You need to know something about what you’re doing. You need to know why you’re buying 100,000 euros against the USD.
And if you’re just beginning to trade forex and you don’t have a lot of money in your account, don’t make the mistake I made. Don’t trade with 200:1 leverage. It’s just plain stupid.