Some traders do succeed at making a lot of money in the forex market but their numbers are not many. Many times, the traders are not aware of the fact that they have the power and might to shift the odds in their favor.
You can dramatically increase your chances of success if you want to. The main reason why traders get defeated by the market can be attributed to their lack of knowledge. In the 21st century, the buzzword is knowledge.
Knowledge is the key that can open many doors. Not only you need to know and understand how the forex market works, you also need to understand your own emotions and other people’s emotions. It is not just a matter of working hard but also a matter of working smart.
So you need knowledge and you need a set of good rules that can help you achieve success. In fact, you need to understand the high probability trade setups and how to manage your money wisely. The ten rules that I think are important for forex trading are listed below:
The Things You Need To Do:
1) Practice and practice on your demo account. When trying out a new trading strategy, first test it on your demo account.
2) Always keep a record of each trade that you make. Maintain a Trading Journal that should contain a record of each of your trades. Analyze each trade in the trading journal.
3) In the end it is all about developing your own trading plan. Develop a personalized trading plan and update it frequently as you learn from the market.
4) Only trade when you are sure about a risk/reward ratio of 1:2. When unsure of a trade, don’t make it. Stay out! It is always better to miss an opportunity than to have a loss.
5) Daily monitor the market for 15-30 minutes. Update yourself frequently about the fundamentals and technicals affecting the market.
First practice on your forex demo account. Try Netpicks forex signals free.
Don’ts
1) Always trade with money that you can afford to lose. Never ever trade with borrowed money! It will affect you emotionally and force you to make irrational trading decisions.
2) Don’t follow someone’s advice blindly. You should be able to understand why you are getting into a trade and how you are going to get out of it.
3) Don’t be concerned about being right. Just be concerned about being profitable.
4) Don’t over leverage! 5:1 leverage is enough. Don’t try to learn it the hard way how dangerous leverage can be.
5) Don’t try to take revenge from the market after a terrible loss. Learn to stay calm and composed. Vent your frustration somewhere else.
One of the most important things that a trader needs to learn is the matching of trading method with the trader’s own trading style and personality. Some strategies may work very well for some traders but may not have the same results for other over a period of time.
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