Forex market has brought many individuals into the arena who are on the quest to become rich in no time or with very little effort, but unfortunately, this is a rare case indeed. Trading takes patience, especially Forex trading takes a great deal of focus along with experience and good judgement in order to make the right decision when investing. In Forex trading, you cannot make money, if you are a beginner or not aware of the rules and facts that are discussed below.
1. Trading is an Art Than a Science –
Trading is an art rather than a science. And to be sure you make no mistakes; it is very important that you hone your skills through practice and discipline to perform well in Forex market trading. After all, this is the only way to become increasingly proficient as a trader. But as said, trading takes patience, so you have to be really patient and thoughtful to learn that art. Note that, all your observations of price action in this market will fail if you rely on the earlier strategies which had led you to success in the past. So be careful with your transactions every time in Forex business.
2. Do not Turn Into a Complete Loser –
The Forex market is completely unpredictable, because at any moment, anything could happen. Your gains can turn into loss in a matter of minutes. But thankfully, you can avoid this happen to you and protect yourself by using trailing stops or can trade more than one to avoid losing money and make yourself stay a winner in Forex business.
3. Logic Wins –
Impulsive buying can be very dangerous, because logically focused traders know how to use leverage safely, but impulsive traders always end up with total bankruptcy. So as a trader, you should always involve logic in your choice to limit your losses.
4. Never Risk More Than 2% per Trade –
This is the most popular yet most violated rule in Forex trading. According to many experts’ advice, you should never risk more than 2% of total equity, because you will not want to risk more money than you can afford to lose. But unfortunately, being an investor in the Forex market, most traders do not follow this simple money management technique as a result they go terribly wrong and lose everything. But to ensure this does not happen to you, it is important that you follow this rule and set a 2% stop-loss for each trade.
5. Always Use both Technical and Fundamental Analysis –
There is a lot of debate about which type of analysis is valuable for a trader, but dogmatically speaking, both are every important to be a better trader, because fundamental analysis is good at identifying general long-term trends that you can trust and technical analysis is helpful for identifying precise entry and exit levels to make profit in this business. So both are every important and as a trader, it is recommended that you analyze both.
6. Always Pair Strong Currency with the Weak –
In Forex business, pairing the strong currency with the weak is one of the greatest ways for traders to make money, because it gives a good indication of winning to make more capitals. To be an effective trader, understanding the independent currency pair is the real key. So make sure, you take this currency correlation as an advantage to make a profit.
7. Always Take Immediate Actions –
To be a successful trader, you do not always need to be right in the analysis. If at any point of time the price action moves against you, it is important that you respect the market and take a modest stop, because eventually this can save you from total loss.
All effective traders exit early to avoid more loss, when they find their anticipation was wrong. So this is what you should do in Forex business as well and take immediate actions against your earlier investment choices to save yourself before it is too late.
8. Remember: What Is logically Incorrect Is Economically Impossible
Many traders who approach the market for the very first time, often design very profitable strategies to generate millions of dollars from Forex business, but often those strategies do not work as these are more often logically incorrect. So the conclusion must follow that, your strategies should always logically correct to make money.
In practice, this is not quite difficult to achieve; you can get it done with the help of the best Forex trading system and know about current trends in currency trading through it.
9. Risk Is Predetermined, But Reward Is Unpredictable –
Before entering every trade, it is important that you should prepare yourself to deal with every scenario, because no matter how certain you are about its outcome, the results are not always as expected. So when you are doing currency moves, whether it is a huge or small, always know that – risk is predetermined.
10. No Excuses, Ever –
If a trader does not understand the price action of the markets, then no excuses are applicable at the end, if he trades. As a currency trader, it is important that you are familiar with the Forex market and you are well prepared for the trading business. But if you do not understand Forex market, it is always better to stay away and not trade, because if you do, you will blow up your account and end up with the total bankruptcy situation.
However, if you are still sceptical and want to make benefit from Forex movements, then you must at least use some forex trading strategy to know what profits and losses you can expect when investing your money. So these are some of the rules that you should follow for a structured approach toward Forex trading to become increasingly proficient in Forex business.