One of the key principles of Forex trading, is trading with trends. You may well have already heard of the saying "the trend is your friend" and there really is a lot of truth in this particular saying that so many currency traders reiterate to one another. This principle applies to all Forex traders; it doesn't matter what trading plan or even what system you use, because ultimately it will be the trends that allow you to make your money in the Forex market.
Forex trading is ultimately about following the crowd, without following the crowd too late of course (because if you follow the crowd too late you will most likely have already missed out on any profitable opportunity).
If you are an independent Forex trader, you are actually very insignificant when taking into account the rest of the currency market which is extremely large and ever-growing; unless you have a large amount of money (millions and millions) to place orders with, your trades alone will not really affect the Forex market's movements in the slightest. However, Forex traders collectively are very significant and they together, almost as a team, can cause both upward and downward trends in the currency markets. Of course the large banking institutions and big, developed business corporations will have more of an effect than independent investors, but individual Forex traders are still influential collectively.
So, the main idea in the FX market is to profit quite obviously, so in order to profit you must find trends and ride them as best you can. This means that you first must spot a trend, understand whether it is upward or downward, find a suitable point of entry and then close your trade once you reach a certain amount of profit. Although this is a very simple example, this is exactly what Forex trading is about, in a nutshell. If a trend is moving upward, you will want to buy the currency pair in question that is a part of this trend and is consistently increasing in value. Similarly, if the price of a certain currency pair is falling, you will of course want to sell that currency pair in order to make profit instead of buying into it and making a loss.
It sounds simple, but the reason why Forex traders deduce losses, is simply because they buy into currency pairs that fall in value and sell currency pairs that increase in value. You might think that they're a bit stupid for doing this and you'd be right, but if you haven't yet begun to trade currencies yet yourself, when you do you will realize that you will also make these mistakes because everyone does - no one can be correct 100% of the time. It is pretty much impossible to trade currencies successfully all the time - you win some and you lose some; currency trading is really about maximizing the profits that you make and winning as much as possible, as well as minimizing the losses that you take and losing the least amount of times possible. The reason why Forex traders don't profit all the time, is because not everyone thinks identically in the market for currencies; if someone profits, someone else has to make a loss - that's just how markets work. If everyone made the exact same decisions in the Forex market, it would be absolutely pointless. The market always changes so it is hard to profit every time, so bear that in mind.
It is worth knowing that more experienced Forex traders can trade against trends and see success. This is when you place an order against a trend because you suspect that the trend will reverse in the near future; some of the more experienced Forex traders can predict trend reversals and such before they happen, which is a little like trading against trends, except they end up deducing profits that can potentially be larger than what average Forex traders can deduce. However, this does take a lot more attention, as well as nerves of steel - not to mention more sophisticated skills. Trading against trends does require experience and a lot of it really, so you shouldn't consider trading against trends at all if you are a beginner.
In conclusion, the main principle of Forex trading, is to trade alongside trends. By attempting to do this, you will be able to dramatically increase your chances of success, in the Forex market. If you trade alongside trends successfully, you will be able to profit every time, though do bear in mind that you probably won't profit every time since losses are pretty much inevitable when trading currencies. Just try to focus on profiting in the long run; it is the long-term profits that you should aim for and not the short-term ones. By focusing on long-term profits, you will stand a far greater chance of actually succeeding, in the ever-changing market for currencies.
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