Doing forex trading requires commitment, perseverance, method, and control of emotions. Very often those who do forex trading get lost due to an excess of emotion, or because they do not meet certain golden rules that apply to each type of investment. Trading with forex does not mean to get quick profits, but to optimize and diversify our own monetary investments. Doing forex trading requires patience and plenty of time, but the main requirements are discipline and operational; those who do not respect these common sense rules will have a high probability of losing their investment. Doing forex trading is like running a business: each operation has to be studied, weighed with the potential risk that we might run and closed as soon as we think that the profit achieved is the best or losses are too high.
Let’s see some of these rules that every trader should follow to avoid problems:
- Invest in training and research. Understanding the dynamics of the market but also the techniques of trading are two fundamental points to succeed. Continuous updating and reading of specialized books are two great tips for those who want to turn this hobby into a profession.
- The forex allows us to earn both long and short, but the best operational is always in the direction of the trend when risks are significantly smaller.
- Never underestimate the training opportunities that demo accounts offer. It’s better to lose virtual money before draining our real account for errors caused by inexperience.
- Use mistakes to create and update our own trading system without being fooled by easy gain promises generated by robots or completely automated trading system.
- A lot of work on emotions, trying not to get discouraged by a series of repeated losses and never too excited if we get repeated profits.
- Despite being open 24 hours a day, we should not operate on the Forex at any time of the day. It’s better to choose the moments of greater liquidity and the crosses that best suit our style of trading.
- The money management is crucial when trading on Forex. Losing small amounts, however, allows us to have available capital to restart. Lose half or all of the capital in a trade could mean the end of the investment experience.
- Adopt simple strategies without waiting for the simultaneous positive response from dozens of oscillators. Select oscillators that we consider most interesting, follow the trend and analyze the patterns of price rules are the best rules to operate.
- Beware of leverage. Many brokers offer high leverage levels to expose us to an incredibly high risk portfolio. It’s much better to start with 20:1 levels and then levels up as we become familiar with forex trading.
- Write down each transaction, mark the pros and cons of each trade and treasure this information for the future. As soon as that market situation will repeat, then we will be able to browse our trading book and avoid falling into the same errors.