subject: Some Forex Trading Rules To Consider [print this page] Here are some rules a Trader ought to consider before trading. Having a set of rules and trading by them will give a better likelihood for success.
Number 1. Forex is not a casino were you roll the dice
If you want to gamble you go to Las Vegas or Atlantic City. Sound trade judgments are made from technical analysis, signals, fundamental analysis and other variables, making decision on a whim is gambling. A true trader has planned out the trades before he executes them You may get lucky if you base your trade on hunches, instincts, intuition, gut feeling or the like or you may not.. But it's a good means to have a short trading career.
Number 2. Paper trade before you invest actual moneyIt is a good plan to give yourself sometime to learn more about forex, the application you are employing and the platform you will use. There is plenty of time to put money at risk The more information you gain the more liable you are to be successful. This gives you the opportunity to sharpen your skills and get good at the software program you will be using. Mistakes can be used as a learning experience.
Number 3. Don't be a hero, go with trendNo one can pick tops or bottoms and trading with the trend increases you likelihood of success. Going against the trend takes much skill and are lower percentage winning trades. Merely jump on the train no matter which direction its going
Number 4. Learning technical analysis is helpful.The market trades on technical analysis and most traders follow it, that's why it works. Read some books on technical analysis and the markets themselves. This insight will help your trading and give you new skills.
Number 5. Don't risk a lot capital on a single tradeA general rule is that no single position should be more than 2 to 5 percent of your capital This way regardless of whether the trade is a total bust and you lose all, your account will not suffer a loss you will not be able to recuperate from.
Number 6. At all times use stop lossesYour stop loss is an fundamental part of your trade and should be entered at the same time your trade is executed. When a trade does not pan out your losses are restricted. Numerous traders use 8% as their stop loss limit There are numerous variables involved such as your level of experience, the signals produced, the technical analysis results, news and others Use a stop loss no matter what the situation
Number 7. Get a look at the forest as well as the trees by looking at different time frames.Looking at different time frame will give you a different viewpoint on the trend. If your are trading the 5 minute chart, look at the 15 and 60 minute to get a broader point of view. You need to look at both the trees and the forest.
Number 8. Emotions do no belong in tradingEmotions are possibly one of the principal reasons traders do not succeed. They have no place in trading and you need to base your trades on technical's and fundamentals, not on how you feel.
Number 9. Trades continuously exist do not fall in love with any particular one.Before any trade have all the variables such as entry and exit price and stop loss clearly defined and planned If the trades goes your way there is no harm in scaling out and taking profits at set points. When it reaches your profit goal exit the trade, positions can reverse quickly
Number 10. Trade the time frame that is right for youDifferent time frames requires different personalities and psychological makeups. Not everyone can be a good scalper or minute chart trader. Select the time frame you consider is best and most comfortable for you.
It is vital that a trader constantly learns and adjusts. A trader that trades by his rules and makes no exception has a superior likelihood of being succesful
