Based on a well-established set of rules, you provide yourself with a better chance of success in foreign exchange trading. Here are 10 rules that a successful Forex trader should keep in mind before starting work:
1. Forex - no place for gamblers
If you want to gamble, drive to Las Vegas or Atlantic City. If you make a spontaneous decision without researching signals, trends, fundamental and other factors, then you are a gambler. The best forex traders plan their transactions based on the best available information. Transactions based on hunches and instincts form a short and disappointing trading career.
2. Practice on a demo account
Practice trading well before investing real money. Allow yourself a reasonable period of time to learn more about Forex and the specific trading program that you will use. Do not rush to bet real money to risk it. The more knowledge you gain, the more likely you will become successful. Practice gives you the opportunity to hone your skills and master the software. And mistakes can be regarded as a learning experience.
3. Trade in parallel with the trend
Trading against the trend requires a lot of skill and gives a lower percentage of profitable trades. It is much more profitable and safer to follow the market in the direction of its movement.
4. Study technical analysis
Read a good book (or two) on the basics of technical analysis and the market itself. This understanding will help you gain new trading skills.
The most interesting books of authorship of Russian and foreign traders can be found in the "Education" section of the Forex broker InstaForex website.
5. Do not risk much in one transaction
A good value is in the range from 3% to 4% of capital. Thus, even if the transaction is absolutely unprofitable, your account will not suffer from a loss that you cannot recover from.
6. Always use stop loss
Place an order at the same time as you enter a trade. And then in case of market movement against the transaction, the loss will be limited. A number of traders use 8% for stop loss. It all depends on the specific time period, the amount on the account, confidence in the generated signals and risk tolerance. Designate stop loss as you think is right in the current circumstances.
7. Pay attention to different time frames.
A period other than the one you are trading in will give you a different perspective on the trend. If you are working on a 5-minute chart, look at the 15- and 60-minute chart to get a broader perspective. Use the best Forex daily strategies to achieve acceptable results.
8. Leave emotions out of the market.
The first characteristic that could be blamed for the failure of any trader is emotions. They have no place to trade, you should base your transactions on technical and fundamental aspects, and not on how you feel.
9. Be true to initial decisions.
Any transaction must have a clearly defined entry price, profit target and stop loss. Take profits and losses where you calculated until the market reverses all your plans.
10. Choose the correct time frame
Each person has a different temperament. It determines what time frame is best for you in trading. Not everyone can be a good speculator on the minute chart, as not everyone can do position trading. Choose a time frame in which you will feel most comfortable and confident.
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