One aspect I have seen that even many good traders don't pay enough attention to is account and trade management. Trade management can be broken down into two parts: before the trade management, and open position management. Before the trade management is about taking decisions on when to enter the market, how much you are willing to lose (setting the stop loss), and at what point do you want to exit the market. Open position management is once you have entered the market and is about when to exit the market, how often to check on your trade, and when to add to an open position. Both parts are equally important to being successful in FOREX trading.

Account management is a more macro outlook on your whole account. Account management is about deciding what leverage to use, what currencies to trade, what percentage to risk per trade, and paying attention to your overall risk and exposure. Account and trade management are not as exciting as the rest of the process of trading, but without them it is very hard to be profitable. A small tweak in account and trade management can really increase your profit, so pay attention to it.

One of the biggest problems that people have in switching from stock trading to FOREX is that they are afraid to lose money. In stocks this attitude works (somewhat) but in currency trading it will wipe you out really quick. This is because even the best traders will lose money majority of the time.

For example, last year I had about 15 trades, of them 3 were profitable. In total I must have profited about 3,000 pips with 2,800 pips on one trade. Of course, I had losses, most of my trades were stopped out but the profitable ones were so profitable that they overcame the minor losses of the not so profitable ones. Don't fear losing money in FOREX, it is just part of the game.

I've had some friends ask me how to hedge against the falling dollar. Short of buying options or futures or entering into a swap or forward agreement I really don't have much of an answer. I guess take some money, that you can risk, and short USD/CHF (with a stop loss) so that at least you can mitigate some of the effects of the dollar fall.
 
Personally that is what I've done. All my assets are in dollars and I tend to travel out of the country a lot so I have set up some small hedges to countries that I plan on going to in the near future. If you'd like to do the same thing, go over to the main page of the site and sign up at one of the forex brokers and trade away.

A friend of mine ordered Peter Bain's course and asked if I could help him understand some of the stuff. I've gone through most of Bain's course on my own a while back so I figured a refresher wouldn't be bad.
 
He has good material, there is no doubt about that, however, while sitting there I couldn't help but wonder if it wouldn't be better to teach people how to arrive at systems of trading that works rather than give them a system (in this case his pivot point system).
 
It's the difference of teaching a man to fish and giving the man a fish. His system will work for awhile, but the markets change. The famous Trading Turtles' break out system doesn't hold anymore, despite the fact that it made them bundles back in the day. Its probably better to teach how to arrive at a profitable system rather than just giving a person one.

I've been trading since 2001, and it seems to me that most of this time I've just been shorting the dollar in the long term. If you look at the charts, the dollar was on a nice down trend by 2003. Sure it hiccupped a couple of times, but the trend seems quite bearish.
 
The question is: when is it going to stop? When is the turnaround? I don't think its happening any time soon yet. The fundamentals are very bearish, though some glimmer of hope is shining through the rain clouds in the form of foreign investors come to the rescue of certain financial institutions. But on the whole, the trend seems to be south pretty strongly.

There are two basic types of trading, fundamental trading – looking at the GDP, PPP, inflation, interest rates, etc of a country and trading based on that – and technical trading – look at price action and trying to make a sense of price action using other calculations such as moving averages, MACD, ADX, RSI, etc.
 
Personally I have found that since currencies tend to trend, the best thing is to do longer term technical trading. In other words, decide what direction to get in on the market by the fundamentals, but decide when and how by the technicals.
 
So the macro perspective is made up of fundamental inputs and the micro perspective by technical inputs.

Today I want to discuss the emotions of greed and fear and how they apply to trading. Greed and fear get in the way of your forex trading, especially if you are trading in a short term horizon.
 
For example, let's say that a chart trader looks at a chart, sees a potentially bullish pattern emerge and pulls the trigger with a 20 pip stop loss and a 50 pip take profit. Now he starts to watch as his trade goes up, which initially it seems fine, but then it slows down. He is sitting on a 15 pip profit. He watches the price seesaw, 18 pips profit, now down to 11, now up to 17. finally it hits 10 pip profit and he can't take it anymore, rationalizing to himself that its better if he take 10 pips profit rather than take a loss he exits… big mistake. The fear of losing his money and the greed to take the 10 pip profit did him in. He lost the potential rise that may have happened after that.
 
What he should have done, after pulling the trigger, instead of watching his profit, is look at the charts, look at the 5 minute to get an idea of what is going on at a finer level, look at the daily for an overall picture, etc. Instead he let his emotions come into the picture.
 
The bottom line is that on most trades you will lose. It's a fact, but you have to cut your losses and let your gains run.