In just a few years, the foreign exchange market has rapidly escalated and gained confidence in the issues of trading in the Forex market. And yet, not every trader can increase his investment, although opportunities for this are usually enough. All this happens for the most part because of a lack of experience, the inability to organize a trading process and the lack of a clear trading strategy.
Discipline is a quality that must be inherent in every trader. It helps to plan and execute the conceived deals. To understand the principles of work, we have collected for you a list of the basic rules of Forex trading. Let’s look at each of them in detail.
Rule number 1: do not rush things
Many beginners tend to set incredibly high goals. Of course, this is a good quality, but only if you know how to achieve them. Many traders are not able to really assess their capabilities and lose their starting capital almost immediately. Often starting traders implement the same scheme: the first few days are characterized by a constant profit, but in the following days, capital is lost at the same rate. Before you have enough experience to conduct real trading, try trading on a demo account. This simulator of the currency market will help you train in planning and execution of transactions. In addition, at first follow the advice: open a deal with a minimum deposit until you learn the market well enough.
Rule number 2: do not stand still
As we said earlier, any newcomer should practice on a demo account, which is available directly on your trading platform. Its advantages are obvious: such a valuable practice will not cost you a penny. This virtual forex market is developed in accuracy, as well as real. However, one should be careful with unreal capital. The following Forex rule says that although the study is good, but you will only appreciate the real money if you value investment. The fact is that by practicing too long on a demo account you will understand how the market works, but you will not be able to fully experience and evaluate all the risks.
Let’s take a closer look at the basic details of work in the virtual market. To begin with it is necessary to be defined with the size of your initial deposit. Approximately it should be equal to your potential account in order to make a virtual auction as realistic as possible. Learn to determine goals for yourself. They must be realistic: so you will have an incentive to make transactions. For example, let’s take an income of 200 points, or a month with 100% income. Choosing a goal is entirely up to you, but go to the next one only after you complete the first one. Try to set yourself 2-3 goals: often this is enough for basic practice. Once you get a full deal on a demo account, you can safely go to the real market. If you are not sure that you have already trained enough in the trade, you should wait with the trade in own capital. It is better to be confident in your abilities, because your investment depends on it.
Rule number 3: the plan is first of all
This advice is suitable for any businessman, not just a trader. After all, when you know exactly what to expect, it becomes easier to control the situation. This is the golden rule of Forex trading, because it can be attributed to any industry. More precisely, the strategy should include such parameters:
o Entry points
o Exit points
o Stop loss indicator
o Take profit level
Develop your trading strategy and clearly adhere to it. Pay attention that it needs to be improved, because the prices for the currency constantly fluctuate and every move of the market somehow affects your deal. It is very important to remember that you can change the plan only if all your transactions are completed. Especially do not do it for a knowingly losing deal. No matter how hard you try, there is a very small chance of its salvation.
Rule number 4: always use the Stop Loss indicator
There are so-called “golden rules of Forex”, and the fourth rule on our list is among them. If you have already practiced in transactions or read theoretical articles, you probably heard about this indicator. Its installation insures you: if the value of the items reaches the stop loss mark, the trade will automatically close with minimal losses. For example, buying a lot of JPY / EUR at the price of 1,14500 the indicator should be put on the price of 1,14470. Thus, we can calculate that as much as you lose only 30 points. Note that the stop loss indicator may not work, because liquidity is not always available at the selected level. One of the main mistakes of newcomers is the absence of stop loss. Instead, they themselves monitor the price changes, and this is a true loss not only of time, but also of opportunities to earn.
Rule number 5: do not succumb to emotions
In the list of “the main trading rules of Forex” this board takes a special place. You should always control your feelings because they are the main enemy in the currency game. The fact that a person inherent experience. That is why many automated systems have been created over time. Spontaneous decisions can turn your expectations in a completely different direction. It is always necessary to follow the pre-established strategy accurately, where all the necessary factors will be taken into account. If you are in an unfavorable state of mind, do not start work. It is better to wait a little, to cope with emotions, perhaps, to walk on fresh air. Remember: the discipline should be in the first place, do not deviate from the planned plan and do not succumb to emotional outbursts.
Rule number 6: do not waste time on trivia
Obviously, the main purpose of working in the Forex market is to generate revenue. Despite this, the trade itself can drag you on for a long time, because this process is not devoid of excitement. Spare time for learning and gaining experience, constantly train. At first, you will do this on a demo account, but do not wait with the transition to real mode. After the first few deals, you need to understand how well this profession suits you. Even if you do not succeed, but the process you like, do not throw. After all, giving enough time to study, in the end you will succeed. Nevertheless, do not be lazy to calculate the loss of your time. For example, you decided to combine the main job with work in the foreign exchange market. Let’s say the salary at the main job is $ 10 per hour, and your starting capital is $ 500. An experienced trader will return investments in the form of 5% ($ 25). Thus, you will incur losses if you need to spend more than 2.5 hours on making deals in the amount of $ 25.
Formulating the following rule of Forex trading, we can say that time is a valuable currency, and you should trade it for nothing. If you do not get it even after hard training, well, maybe it’s just not your vocation. Try to turn Forex trading into a source of basic profit: if you focus exclusively on this occupation, it will repay you in the same coin. Another important advice may be to increase the volume of trade through the size of the deposit. That is, the size of your starting deposit should not be large: it is better to increase your income gradually.
Rule number 7: do not leave school
The foreign exchange market is in constant motion. Each trader simply must from time to time develop his strategy, apply new tactics, techniques and edit them in accordance with the behavior of the Forex market. The currency market itself is quite large and contains many different components. You must carefully study them all in order to constantly be in a trend. You must understand that the ideal strategy for today, will not be tomorrow. It is necessary constantly to monitor the new information and act in accordance with it.
Adhere to these rules of foreign exchange trading in order to get the most positive results. They are created by experienced traders after analyzing their mistakes.
Nevertheless, all the rules that you set for yourself, sooner or later become obsolete, after which you change them.
Rule number 8: do not forget about the analysis
As in any other profession, the more you learn, the higher you raise your level. For your trading route, you will gain experience and be able to independently assess their trade. It will be useful to develop a habit of comparing oneself of the past and the present. All your actions are interrelated, but if you do not improve, you will not be able to achieve maximum profit. To learn from other people’s mistakes is certainly more convenient, but it is much more effective to learn from your own failures or ups. Do not throw a deal that ended in success. It is the analysis of successful transactions that will give you an additional advantage: some elements can be copied into the next experiment.
For traders who know the discipline, the rules of Forex trading, which we talked about today, will not seem complicated. Understand that only systematic trade will bring real success. Training and training will bear fruit only to diligent traders. Using these tips, you can easily create a basic trading strategy, and then modify it to your trading style. Trading in the foreign exchange market is what you should strive for and you will see the result of your efforts before you can think about it.