While most of what you learn about trading will come as you gain experience, there are several ground-rules that should be understood just to prevent yourself from blowing out your account right away. For beginners, try to get a sense of what sort of day it is for the currencies that you follow. Make sure that you’re at least somewhat aware if a big economic number is coming out that day that might have an influence on the markets.
As the market opens do you notice a trend developing? Typically you want to trade with the trend, not against it. That way you can expect big winners and small losers as opposed to the opposite. If the pair is developing a range, you might have a chance for a very low risk high reward trade. Try getting short or long at the edge of the range and covering if it breaks out. Be sure to cut your losses if this doesn’t work. Otherwise you’re changing the definition of the trade itself.
Trading is a psychological game and therefore your mindset will affect your performance. If you have a few bad trades in a row, think about taking a break. This is especially true if you feel yourself beginning to become angry or ‘on tilt,’ as we call it. Be wary of most tips that you get. It is always best to do your own research. It might be worthwhile to invest in some kind of news service to get up to date information on what is going on in the world.
It may also help to familiarize yourself with some of the basic technical indicators and the proper way to use them. Again, it is very important to make sure you understand how to read these indicators before you start risking money based on their signals. You should also know when to ignore their signals when they are contradicted by other information.
The best trade to put on is the one that has the most synergy between multiple sources of information, such as the following scenario: Bad news for the U.S., good news for Europe while the USD/EUR has been trending down all day and is currently in a significant pullback. Perhaps the MADC crosses as well or you get a relatively weak indicator on the RSI. These are all indications that you would want to take to be short the USD/EUR pair.