By relying on a calibrated 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 getting started:
1. Forex is not the place for gamblers
If you want to gamble, go to Las Vegas or Atlantic City. If you make a spontaneous decision without examining signals, trends, fundamentals and other factors, then you are a gambler. Best Forex Traders plan their deals and based on the best available information. Trades based on guesswork and instinct form a short and frustrating trading career.
2. Practice on a demo account
Practice your trading well before investing real money. Take a reasonable amount of time to learn more about Forex and the specific trading program you will be using. Do not rush to bet real money in order to risk it. The more knowledge you gain, the more likely you are to be successful. Practice provides an opportunity to hone skills and master 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 results in a lower percentage of winning trades. It is much more profitable and safer to follow the market in the direction of its movement.
4. Learn technical analysis
Read a good book (or two) on the basics of technical analysis and the market itself. This understanding will help you acquire new trading skills.
The most interesting books by Russian and foreign traders can be found in the "Training" section of the Forex broker InstaForex website.
5. Don't risk too much in one trade.
A good value is between 3% and 4% of the capital. This way, even if the trade is completely unprofitable, your account will not suffer a loss from which you cannot recover.
6. Always use stop loss
Place an order at the same time you enter a trade. And then, if the market moves against the trade, the loss will be limited. A number of traders use 8% for stop loss. It all depends on the specific time frame, the amount on the account, confidence in the generated signals and risk tolerance. Designate your stop loss as you see fit in the current circumstances.
7. Pay attention to different time frames
A different period from the one you are trading will give you a different perspective on trends. If you are working on a 5 minute chart, look at the 15 and 60 minute charts for a broader perspective. Use best Forex daily strategiesto achieve acceptable results.
8. Leave emotions out of the market
The first characteristic that could be blamed for any trader's failure is emotion. They have no place in trading, you should base your trades on technical and fundamental aspects, not how you feel.
9. Be true to your original decisions
Any trade must have a clearly defined entry price, profit target and stop loss. Lock your profits and losses where you calculated, until the market reverses all your plans.
10. Choose the right time frame
Each person has a different temperament. It determines which time frame is best for you in trading. Not everyone can be a good speculator on the minute chart, just as not everyone can handle position trading. Choose a time frame in which you feel most comfortable and confident.