Becoming a successful Forex trader does not happen by accident. You need to follow a strict set of rules flawlessly. These 8 rules give you a head start in becoming a successful Forex trader.
Why get in to Forex trading if you are not going to learn what you need to do to be successful and practice what you learn until you are good at it? It is just like learning any skill, like riding a bicycle or tying your shoes. There are certain rules to follow to be successful at Forex trading, and once you learn them and can apply them systematically to your trading... you'll never forget how to make money trading currency.
Successful Forex traders have a plan dictated by strict rules. Sometimes they make up the rules themselves. Sometimes they use rules provided by other successful traders (the fastest and most successful way). Most of the time it is a mixture of both. But make no mistake about it... you need rules and you must follow them if you want to be a Forex trader.
To help you get started, here are 8 rules you can adopt to help you become a better trader:
1. Ask and seek help. There is no need to reinvent the wheel here. There are thousands of people who have gone before you. Learn from them. Seek them out and learn from their failures and successes. Stand on the shoulders of Forex trading giants and you greatly reduce the time it takes to become a successful trader yourselves.
2. Don't ever trade with more than you can afford to lose. At one point or another, you will make losing trades. These losing traders are a fact every trader has to live with. So, you plan must take into account losing trades if you are to be successful. So, manage your risk by keeping the amount you use reasonable.
3. You are not smarter than the market. You will never be able to predict every move the market will make... so don't use this as your standard for trading. You can use indicators to interpret trends and make trades according to what you think might happen. But don't kid yourself into thinking you are going to find the perfect system that outsmarts the market... you will only end up losing money.
4. Treat Forex trading as a game, a serious game, but a game. I don't want to downplay the seriousness or tremendous opportunity currency trading provides, but you do need to keep it from becoming a life and death adventure. Learn from both your wins and losses, and try to become a better trader, just as you would do if you were an athlete competing in a sport.
5. Think long term. Taking a snapshot of how you are doing at any given time is not the way to measure your success. Remember, a watched pot does not boil. You do need to go over what happens in the short term and try to improve, but success will be determined on your consistency over the long term.
6. Always use stop losses. if you don't place a stop loss on every trade, you are doing a high wire act without a safety net. One false move can spell disaster. Smart traders use stop losses to make those losses we all suffer bearable... so we can live to trade another day. Don't be a daredevil and get overconfident. Plan for the times when the market goes against you... because eventually it will.
7. Never deviate from the plan. Once you've decided on a plan, you must have the discipline to carry the plan out without fail. Stick to the system and don't get overconfident and start making decisions based on emotion. Otherwise, the market will humble you.
8. Only trade when you are calm and collected. You need to make your decisions based on the plan you are following, not any kind of event or feeling that is going on in your life. Your emotions do not effect how the market acts or how much money you make. If you are in a agitated state, I suggest not trading until you calm down.
Forex trading can be very profitable if you have a solid plan and stick to the plan. It is not something you do on a whim. Make sure you have rules to follow, or start by following a successful traders rules. There are great Forex trading plans out there, all you need to do is find the one right for you and condition yourself to follow the rules without fail. I hope these 8 rules for Forex trading success get you started on the right path.