There are so many aspects to forex trading that it is really not difficult to get confused. Where do you begin? What do you need to look for? What products should be used? And most importantly, what are the Rules for Forex Trading to consistently make profits?
I guess so many questions, so many opinions and answers. There will be certain people willing to put their lives on the line for their own system, whilst others will swear to a different system or set of rules. This is simply because each person’s aspirations, circumstances and expertise are different. But in my experience, there are universal Rules for Forex Trading that must be applied in order to be successful. In fact, these rules apply to almost any business venture undertaken. I have modified it slightly to apply to forex trading specifically.
Invest in yourself
Before starting to trade, invest as much time and effort in yourself as necessary to make sure you become as knowledgeable as possible about currency. Do thorough research, ask questions and find things out for yourself – do not merely rely on what others say. Do proper testing of various products and systems before starting to trade on live account. It should be a constant learning process. This is possibly the most important of all the Rules for Forex Trading.
Devise a plan and stick to it
To coin an old phrase: “Failing to plan is planning to fail”. You cannot even begin to start trading if you have no plan. A plan should include a detailed outline of the trading strategy to be followed, the lot sizes, time lines, trading hours, currency pairs traded, profit-taking exit targets, capital preservation strategy, etc.
Trade using a proper system
Once you plan is in place, a system is paramount for success. I do not know of a consistently successful trader who doesn’t use a proper trading system. Whether a manual or automated system, make sure the system is sound and then stick to it. This will eliminate emotional trading and give you a proper framework to work from.
Do not take risks
Taking risks in forex trading is the same as gambling. Sure, there are inherent risks in forex trading, but haphazard risk taking will certainly wipe out your account quickly. With this, capital preservation is of paramount importance. No capital = no trading. It is really that simple. Avoid wipe-out trades and employ proper risk-management strategies.
The Rules for Forex Trading are very simple. But it is not easy to implement and stick to. Keep working at it and you will reap the benefits. Regularly check your system against the rules and make appropriate changes.
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