The 5 most important trading rules for Forex traders
If you aren’t respecting these 5 trading rules, it will be nearly impossible to succeed in the Forex market.
All Forex traders have different trading styles and strategies to make returns. Even though few Forex traders succeed overall in this game, there are many ways a trader can research and adopt a winning plan that suits their investing style.
Trading rule #2. Protect your trading account and lower the risk of losing money
One of the best ways to keep risk low is to utilise low leverage. Your focus also needs to remain intact during the hours you trade. Don’t let emotions affect your trading judgement.
Most Forex traders will lose because they either trade too big or too often. Decreasing the risk to 1% per trade will enable you to focus on perfecting your craft rather than becoming rich overnight.
This strategy is not holding you back. Many traders have been able to make outstanding returns by only risking 1% per trade. Utilising effective risk to reward ratios in combination with accurate entries will enable you to trade safely while capturing great returns.
Trading rule #3. Always adapt and learn
All Forex traders are on a mission to find the golden trading strategy that will make them as successful as possible in the shortest amount of time. While it can be worthwhile to find profitable mentors, your success is ultimately based on how you adapt to different conditions.
Recognising the patterns and fluctuations in the Forex market is crucial. Trading Forex 10 years ago was a different game; the market is now much more complex. All moves, breakouts, and fakeouts become balanced while manipulation is slowly becoming more unpredictable. We need to understand from where the market momentum is originating and attempt to profit as much as much as possible when we identify an opportunity.
All Forex traders must practice learning and journaling. Developing more precise and efficient techniques in every aspect of trading should always be a trader’s priority, rather than making a quick dollar that will eventually be given back to the market.
Trading rule #4. Know when to trade and when not to trade
Organising your operation in Forex is 90% of the work. You will continuously either be waiting for a trade, holding a trade, or reconsolidating and reorganising yourself. Many breaks are needed to maintain a positive and productive mindset.
We all have been through the losses of revenge trading and the feeling of not knowing how to come back after a losing streak. However, taking a break to only repeat the same mistakes is also not helping your trading game.
Take time to understand what happened during your loss and where you went wrong. Gain clarity from the mistake and make sure you are in the right mindset when you return to the screens.
Trading rule #5. Withdraw your profits
Making withdrawals and seeing the physical cash that can come from the market is what makes trading a real and sustainable activity. Trading Forex takes courage and determination, both of which you should be rewarded for monetarily.
You do not always need to withdraw all of your profits. Semi-compounding your account is a smart way to reach new milestones, but try to regularly withdraw money from the market to acclimate to the amount of money flowing in. Regardless of the amount – if it’s £10 or £10,000, always make sure you are purging your greedy tendencies outside of the market.