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Forex Trading Rules
Forex
trading is a learnable skill. Therefore, understanding its fundamentals
is
essential to your success. Unfortunately, many beginner traders are
unaware of
most, if not all of the basic rules underlying Forex trading. In this
article I will explain five golden rules that every Forex
trader should
keep in their minds.
1.
Start with a demo account:
Most
Forex trading websites offer
free demo accounts which allow you to do live trades with “virtual
cash”. Use
this as a way to make yourself comfortable with the ups and downs of
the Forex
market, familiarise yourself with your Forex trading platform, develop
your own
strategies and build up your self-confidence before you trade with your
hard-earned money.
2.
Plan your trades:
To
enter a trade without a plan is no
difference from gambling! Before you enter a trade, you should have a
clear aim
of profit as well as a clear threshold to cut loss. Once you have
reached your
target profit, close your trade and keep the profit. Similarly, if the
trade
hit your cut-loss threshold, close your trade and get out. One should neither
be too greedy nor too ‘optimistic’ to hope that the market
to come back your
way. Self-discipline
is important. For
beginners, it is also good to start
small with micro- or mini-accounts with smaller leverage.
3.
Follow the trends:
When
your currency pair shows an
increase or decrease, enter a long or short as necessary. Do not go against the
trend as it is a fastest way to lose your money. There are
experienced traders
who make money by trading against the trend, but let’s learn to crawl
before we
can do a sprint!
4. Control your emotions:
Being
emotional with your money is
harmful in Forex trading. Controlling
your emotions during a trade can help you to be more
objectives in responding
to each market movement. Emotion management goes hand in hand with a
trading
plan, i.e. the better you plan your trade, the better you can control
your
emotions. Accept that no profit is guaranteed in the Forex market and
make sure
you are trading your truly disposable income at your own comfort level.
5.
Review your trades:
Make
it a habit to record your trades
and review them regularly. Learn from both the good and bad trades.
Never mourn
your losses! All these priceless learning experiences will ultimately
make you
a better Forex trader.
On
top of these basic rules in mind, do
spend time to educate yourself on the
market and strategies, then you are one step closer to
become a successful
Forex trader!
Forex
Trading Rules
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