How To Make Money On The
Forex Markets: 5 Golden Rules
Just as there are rules and guidelines for forex trading
strategies when you are learning how to make money on the forex
markets, there are also tricks for dealing with personal
factors and habits that undermine our success. Here are 5
golden rules for handling ourselves so that we can move
smoothly from hesitant beginner to successful forex trader.
1. Keep Cool
Successful traders do not let their trading depend on their
emotions or their emotions depend on their trading. They do not
risk more because they are feeling lucky, they do not hesitate
when the signs are right, or pull out of a trade too soon out
of fear. Equally, they are unlikely to celebrate a gain, nor
will they sulk, shout or kick the dog when they lose.
A person who is ruled by their emotions will not make it as
a forex market trader. Self discipline can be learned but make
sure that you have fully mastered your emotions on a demo
account before you think of going live. If you are still taking
unplanned risks you are not ready for real trading.
2. Think For Yourself
Different traders have different techniques. This means it
there is limited value in getting advice from anybody else. In
fact, unless you know that the person follows your system and
techniques, their advice is probably worthless to you.
Do not copy somebody else's system just because they seem to
be making money with it. Do your own research and check
everything that you are told. Even then, consider carefully
before abandoning the system that you have chosen before. There
may be factors that you have not taken into account. Something
that works for somebody else will not necessarily work for
you.
3. Keep Records
Keep a spreadsheet detailing every trade so that you can see
patterns in your own results. You do not necessarily need to
use it to change anything, but refer to it often to remind
yourself of the many small trades that add up to success or
failure.
What should you record? At a minimum, the currency pair,
your position and the opening and closing prices. However,
these bare facts will be much more informative if you can also
add why you took the position. Did it fit the criteria of your
system? What made you think that the trend would go your way?
When you look back you will have a much better view of why your
trading history is going well or not so well.
4. If In Doubt, Stay Out
Do not open a trade if you are hesitant or unsure about it,
provided of course that you have a reason other than fear for
your hesitation. A trade can only go one way or the other, so
if it is not completely right, it is wrong. Wait. There will be
plenty of better opportunities.
5. Limit Your Trades
Do not be drawn into thinking that you must never miss an
opportunity. You do not have to be on top of a lot of different
currency pairs and jump into every market regardless of what
else you may be doing.
Limit the number of open trades that you have. It is not a
good idea to have more than two open positions at the same
time, and unless your first trade in the forex market is
profitable you should not even consider opening a second.
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