One of the crucial pieces of currency trading knowledge that you should have if you are going to have any possibility of making money with forex trading, is how to set up your trading strategy. Having a good coherent plan that you can stick to, will make all the difference between profit and loss for many traders. Get yourself a good forex ebook and study the different forms of forex trading. Remember that the majority of traders beginning out in forex trading lose money, so it is essential to carry out everything you can to make certain that you are one of the profitable ones. Having a strategy will provide you a good start over most traders who merely start trading with no notion of where they are heading. Having a profitable method is important of course and there are many forex ebooks out there that will give you this currency trading information. Most beginners think that the trading system is the one thing that matters and exhaust all of their time searching for a spot on system that is guaranteed to make money for everybody. But no such trading system exists. Although there are a bunch of fine systems, no system will be successful without a trading plan that is tailored to the single trader. This means that you need to figure out your trading plan for yourself. Do not be alarmed however since it is quite straightforward. Your plan just needs to include three things:

1. Size of Lot This can be measured in the number of positions that you will take on every trade. It may vary according to the strength of your signals or it may possibly be the same for each trade, but it must be clearly set out. Do not vary your lot size according to intuition, and do not vary it according to whether your preceding trade was profitable or not. When you are deciding on your lot size, you must also consider your gearing and what proportion of your total funds will be committed to a trade. This is part of your risk management plan and it is crucial currency trading knowledge that you must always have by your fingertips.

2. Stop Out Losses Your strategy must include a stop loss, measured in terms of pips. Again you must consider the risk that you are taking as a proportion of your overall funds. In most cases you should target for a risk of around 2% for every trade. However, with selected systems or if you have a very low initial pot, you may well want to go higher than that to get around your stop loss being triggered too often. Just be wary that if you do that, you have a greater chance of going bust.

3. Profits You must also establish the exit place for a winning trade, i.e. how many pips you are aiming to achieve. If you do not establish this you will often be tempted to hold out as long as possible, praying that the trend will remain your way. Often times you will be caught out by a unexpected reversal and a profitable trade can be turned into a loss. So it is very vital to decide ahead of time how much profit you will take. Once you have your currency trading information embedded in your strategy, it is crucial to keep to it consistently. Avoid the temptation to trade when the signals are not quite right, or to stick to your gut feelings in anything, at least until you have many years’ experience of the market.There are a number of forex ebooks that can help you with the mental aspects of trading. Also, reduce interruptions whilst you are trading. This will help you to stay away from making daft mistakes and keep you concentrated so that you can make the best of all of the forex trading information that you have acquired.