Concluding the series on the Aussie Dollar, Andrew Barnett reveals his top tips for profitable trading.

So beyond the fundamentals and technicals necessary to trade the Aussie Dollar successfully, there are some key elements that some traders know but for some reason don’t actually follow. There aren’t actually any “secrets” or “Holy Grails” when it comes to trading, but typical common sense. Let’s review…

The markets are random, embrace money management

If you are going to make money trading the Aussie dollar you must appreciate the randomness of the markets. No system has the ability to get it right more than wrong consistently. Your salvation as an Aussie dollar trader is money management and how you handle the losing trades and how you let the winners run. Some of the world’s top currency traders only get their decision correct 50 to 60 per cent of the time in some months, but there is one big difference between them and the rest. They win on average bigger than they lose, period!

Make sure you:
•    Trade the right volumes for your capital and emotions. You need to be ok with the amount that the trade may potentially lose prior to entering.
•    Manage your risk using a risk calculator. This will ensure consistency in your risk levels and your trading volumes, based on the stop loss size you are setting.
•    Base your success or failure on Return On Investment not by counting pips! Amateur traders count pips, professional traders count Return On Investment and Risk of Account.
•    Accept that trades will go against you and learn how to minimise losses and maximise profits.
•    Consistency is Key! Set your Money Management in a written Trading Plan and stick with it.

Get into a routine

One of the biggest problems with all traders is they switch plans at the first sign of failure and often this can be after only one or two trades. It’s usually not the system that sees a trader make or lose money, it’s YOU! It’s how you play the game with your money management and discipline and patience.

To develop a routine to trade the Aussie dollar is relatively simple. You need to find credible and reliable sources for your fundamental information flow, (base metals, interest rates, new announcements, stock prices and inflation data) and you need a technical strategy that will likely stand the test of time that is used by professional traders.

The routine should involve checking the key elements every eight hours. But that should only take a few minutes, so the total time watching the markets shouldn’t need to be more than 20- 30 minutes per day.

Falling in love with a strategy or direction

You have to be flexible as an Aussie dollar trader and whilst the flavour of the week this week might be oil prices or European debt concern, it may switch very quickly and you need to be ready to think on your feet and to alter a view or position.

Many traders who trade charts alone fall in love with a position based on what the chart is telling them and when the reality of what has happened hours or days ago fundamentally stops them out they are left wondering why their system didn’t work.

There is ALWAYS a reason why fundamentally an Aussie dollar trade didn’t work and you can ALWAYS find out why the price moved in a particular direction because the fundamentals will tell you. Maybe the RBA boss spoke about inflation, maybe they put interest rates up, perhaps unemployment dropped or the consumer confidence number came out. Whatever happens to price it is driven usually by fundamentals and the fundamentals will be reflected in the chart pattern, but only what happened in the past, a chart can never predict what will happen in the future.

So don’t fall in love with the AUD going up or down. If an unexpected news announcement (such as a natural disaster) happens it likely won’t make a scrap of difference to what the charts says, the market may turn on the Bulls and become a Bear market for weeks or months in a matter of two minutes.

Trading the news

What you may not know is that Banks usually make most of their money trading the Aussie Dollar when news breaks, rather than watch technical patterns on charts. Here is a big tip. Don’t try and trade the news on your own as you won’t have access to a trading platform through a regular Forex broker that will allow you to enter an order quick enough when the news breaks. And you won’t likely have the news quick enough to get in anyway. By the time you see the news price has moved. Professionals have proprietary platforms that show market depth and news instantly. They are paying for their Bloomberg and news feeds and will get the news quicker than you will. Unless you're a private trader who pays or subscribes to get the live information flow, trading the news is not for amateurs.  But it certainly can be learnt provided you have the right information flow and trading platform.

Andrew Barnett, is a professional trader and Co-Founder of LTG GoldRock. On a daily basis he not only “talks the talk” but he actually “walks the walk”, as he guides traders around the world in the live market and advises them on buy and sell directions, as well as trading his own personal account. For more information go to www.LTGGoldRock.com