ForexDiva's Favorite Trading Cliches

My forex broker has been telling me trading cliches for the past year and all along, I've been thinking that they were trading cliches.

However, I recently realized that he's been right all along.

So just in time for the holiday season, here are some of ForexDiva's favorite trading cliches to cheer you up whilst you trade:

1. Always use a stop. The great thing about stops is that you could move them to lock in a few pips of profit while you're trying to catch the trend train. The art of trailing stops is definitely worthy of investigation.
2. Ensure that every trade you make has a good risk to reward ratio. Being selective about the trades you take ensures that you're making good use of your time.
3. Look at longer term charts and then drill down to a slightly shorter term chart from there. If you're wondering how to do this, I've heard from a few different sources that you could use either an 8:1 ratio, a 10:1 ratio, or even a 12:1 ratio to determine which charts to pair together. As an example of the 8:1 ratio, you would look at a 15-minute and 120-minute chart together.
4. The trend is your friend. Remember to stay with the trend.
5. Pay attention to the support and resistance levels. What once was support could become resistance and vice versa. I've been noticing that support and resistance have been working like magic lately. For instance, as of 13 November 2008, DJIA has been trading at an approximate range between 8000 and 9600. Once it hits 9600, it doesn't go much higher than that. When you think of it, it makes total sense. There is still a lack of capital in the markets due to the liquidity crisis. Even if hedge fund managers wanted to be bullish, it's not technically possible at this moment in time.
6. Remember to have trading discipline - meaning, keep the fear and greed in check - and perhaps most importantly, not moving your stop further away when a trade is against you.

Happy trading!

Disclaimer: Do your own homework. Do not in any way take this to be investment advice. You are responsible for your own portfolio.