The Ten Principles Of Forex Market

The forex market is a continuously evolving universe where profit yielding trading

strategies and trading systems enter, play and eventually are replaced by better strategies and trading systems. But there is a common denominator to all these strategies that have managed to consistently draw profits for a decent amount of time and are usually passed on as formulae, mantras and rules to trade by, from forex experts, trainers and gurus to the novice traders. These rules of trade are lived by all small big players of the forex trade. Heres a brief summary of all they live by when they trade:

1.The thumb rule of forex is to buy low and sell high. It is what traders dream about achieving in trades. Everything else done it to achieve this basic dream

2.When traders run with profits even when they are taking quick losses, it brings about good money management. This can be done by keeping the risk reward ratio as minimum as possible while making trading plans.

3.Be patient and wait if you do not know for sure what the trend is. Have the prudence to sit out trades when the conditions are difficult and carry very high percentages of risks. Every trader has his day, when you are having a bad day do not resort to revenge trading, sit the day out.

4.The market has sufficient momentum to force high prices higher and low prices lower following the general trend, making the market never too low to sell and never too high to buy.

5.If you are a fan of technical analysis then impact the forex news is already included in the rates of the currencies in the currency market. If you are a fan of fundamental analysis buying the rumour and selling the fact is what you need to do.

6.Make a trading system, plan your strategies objectively and follow the system with discipline. It is a trade not a gamble.

7.Follow the trend. The trend is the most likely prediction of what is to come and going with the trend always reduces the risks considerable.

8.Markets move slowly when they are rising and crash quickly when they fall. Though this is not a very noticeable factor in the forex market, but it can be evidently seen.

9.Risk only as much as you can afford to lose. Leverage reasonably and always have risk management plans to cover your back.

10.In the end remember it is a market. Profits and losses are a part of the package. There is no perfect trader or a 100 % guarantee. Trade with your head and not with your heart. Keep your greed and irrational fears under control.

by: ali bell

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