Advice on Forex Tip Trading

Many experienced traders in foreign exchange (forex) markets avoid making decisions based on tips or opinions. In the highly technical world of the forex market, though, many traders act on tips.

The forex market is basically the buying and selling of currencies. Although there is really no set location for the market, it covers the whole world, with most of its action occurring from the major trading centers in major cities of developed countries like the US and countries in Europe. The forex market is active 24 hours, Monday to Friday, through the telephone or through the Internet.

Whether the tips were generated from an automated forex trade robot software or knowledge from real-life people, forex tip trading adds to the risks in an already risky way to make money. It is like spending your hard-earned money because of rumors or gossip in the streets.

All tips, which usually come as information from a website, an e-mail, an SMS or other forms of instant messaging, have to be validated first for their accuracy. The sources of these tips, as well as their history of performance, should be evaluated.

The worst thing about acting on tips is that a person would probably stay with the trade against all reason and not cut your losses because of a tip’s possible reliability.

Here are some more advice on forex tip trading:

  1. If you know a source of a tip, look for a trader who used or is using the tips from this source and what results have come out of them.
  2. Tips from strangers, especially from those who give tips on the telephone, should be ignored
  3. Tips from knowledgeable people, such as fellow traders or financial planners, should be analyzed first.
  4. Tips from those you know (relatives, in-laws, friends) who have little to no experience in trading, should be met with skepticism, if not ignored also, even if these people give a sales presentation or some other means to convince you. Remember that market trends are the only important friends you have. Always trade with the trend!

Because sometimes, tips and opinions from relatives are hard to disregard, some forex traders see no other way but use them, but here is what they do:

Buy small. This way, the losses are small if the tip turns out to be bad. Never let your losses overwhelm you, because losses can devastate you emotionally and will reduce your trading capital. Always remember the first goal of trading: preserve your capital.

Get a second opinion about the tip from a more reliable and competent source.

Check the forex charts first before acting on a tip.

People should be wary of forex tip trading. Although tips and rumors are part of the game in forex or in any market, these are mostly spread because of ulterior motives through brokers, media, analysts, or other rumor mongers in the interest of any particular company. Instead of basing your trading decisions on tips, have confidence in your own plan.