Forex Trading Guidelines
There are some guidelines you must read before entering foreign exchange market. Following these guidelines will make you a better prepared forex trader.
1. Plan your trades.
Plan your entry/exit to the market, plan when you will sell for losses, plan where your maximum profits will be. Professional trader must be discipline.
2. Market trend is a friend.
Don’t ever argue over the trend. When the trend is up go for a buy and when the market trend is going down then go for a sell. You’ll get no losses as long as you follow the trend.
3. Focus on your capital.
This is the most important, do not be greedy considering your capital is on the open. Use only 10%-30% of your capital. Don’t exceed 50% of your capital, because you can’t retain the market ups and downs and you will in the margin.
4. Know when to stop losses.
If you made a mistake in the analysis, sell it, and let it happen. Don’t hold on a false hope that the price will go up. This false-hope condition can cause a very great loss. When you re-enter the market, make sure your stop-loss position, and when you have to let your money go to take your losses.
Just like the other, in forex you’ll win and you’ll lose, but don’t lose till you’re broke.
5. Take up gains when the trade is going up.
Before you enter the market, decide how much profit you will gain. When you enter the gain you wanted, close your position. Just let the price wanders around and don’t fall on false hope.
6. Don’t be rational with your feeling.
The most common enemy of trader is greed and scare. Don’t let this two overrule you or be ready to have -$100 from $100 in your account. Professional trader won’t ever show his emotion, you won’t even know whether he’s taking profit or losing money just by the look in his face.
7. Don’t trade because of signal from a friend or broker.
Trading fall on your own analysis, signal is only an opinion, don’t make signal your main concern.
8. Make a note.
Write things you buy and sell, and write down why it had to be executed. When you accomplish or fail, look up your notes again. Your trading skill will develop far better.
9. Don’t enter the market when you’re in doubt.
When you don’t know where you’re going, try to sit quite and analysis until you are sure. Stand back usually is the best way.
10. Don’t exceed your capabilities in trading.
In a single moment, having 3-5 position is normal, not more, cause opening up position will blur you and lose control and your feeling will rule your logic. For beginners try to play only with a pair of currency.