- Wait for a trade, don't look for one. "Strategic forex trading
means you have a plan in place," Mr. McDonell says. "You know the trade
you want to make, you know the economic developments and market conditions
that are right for that trade, and you wait for those conditions to appear
-- then act. If you're not doing that -- if instead you're scanning
incoming data and looking for trades -- you're going to lose because by the
time you trade, conditions will have changed and you'll be too late."
- Don't let money be the carrot. "Having a strategy isn't enough
-- you have to stick to it," Mr. McDonell says. "Sometimes that will mean
passing up what seems to be a money-making opportunity. It might be -- but
if you start chasing the money, you'll be working without a strategy, and
over time you'll wind up behind."
- It's all about inflation. "All forex trading opportunities are
created by changes in interest rates -- and those changes are made by
governments responding to inflation or deflation," Mr. McDonell explains.
"By watching key economic indicators, you'll be able to establish a forex
strategy."
- Only three indicators matter -- the CPI, the PPI and the NFP.
"It's a myth that to be a successful forex trader, you need to track
thousands of indicators," Mr. McDonell advises. "Since inflation is the
key factor in forex trading, what traders really need to watch are the
inflation indicators -- the Consumer Price Index, the Producer Price Index
and
Non-Farm Payrolls. With that data, you have the basis for tracking global
currency moves and establishing a strategy."
- You have to earn your profits. "Even with a strategy in place,
forex isn't easy," Mr. McDonell warns. "Developments move quickly and
risks are high. It takes work to understand and track economic
developments, and to plan and execute a trading strategy to take advantage
of them."
- To manage risk, create a budget. "Forex trading is a high risk activity, and you shouldn't commit money that you can't afford to lose," Mr. McDonell says. "A key part of strategic planning is to establish a budget -- including downside limits. And a key part of strategic trading is to stick to that budget, no matter what."
Contact Information: Contact: Katarina Wenk-Bodenmiller Sommerfield Communications (212) 255-8386 katarina@sommerfield.com