Here is how you can have your very own Forex success formula.
Nowadays being a successful trader means having a strong and productive trading system with crystal clear goals and a sturdy set of trading rules of increasing your chance of success. It is true being a successful trader is far from easy, but in the Forex world of trading, being successful means depositing a significant amount of money in your bank account and everyone starts its journey from a coastline. Our best veteran traders got together and devised a set of robust rules to get you started in becoming a successful trader in this complex Forex world. First thing is we must begin with the basics. This requires developing a solid trading strategy in accordance with your risk tolerance and financial target. Today we will cover all the Golden Rules you need to know to become a profitable trader.
Rule #1: First develop your very own Trading Plan
A trading plan is a specific set of hand written rules for you to follow without hesitation and respect it with military discipline. This consists of the entry points, the exit values and the overall good management of your other actions on the trading chart. By making use of a trading plan, you can quickly handle your investments and manage your losses to keep them as low as possible. Be cautious because developing and sticking to this trading plan takes time. Be patient and be sure to “stick like glue” to your trading plan.
Many trading platforms offer the required technology to anticipate whether your next move will be good or bad. So testing a trading idea before risking real money is now a fact worth embracing and ultimately adding to your trading plan.
Rule #2: Manage your trading efforts like a real business
Successful traders know how to behave and all actions on the Forex chart need to be as if you were dispatching rules in your business where you are the CEO. Many fail from the beginning because they make the mistake of believing that trading is a hobby and not a profession whereas success comes the other way around. Real commitment comes only in a business not in a hobby. Manage it the wrong way and it will become a very expensive hobby. Do not treat the trading process like a job because it is going to become very frustrating very fast as the paycheck is irregular.
Trading should be treated in a very professional manner exactly like a business where you keep a close watch on all losses, tax values, stress levels and risk management. Be sure to plan ahead and treat this as serious as possible.
Rule #3: Protect Your Trading Capital
Keeping your expenses short has never been easy but this is exactly what you need to do in order to maintain a new trading account. Do not dig too deep and the effort will be a lot more consistent than you have predicted. Never forget that keeping your account healthy is not the same as avoiding any bad trades, these are by all means almost unavoidable. There isn’t a single trader in world that hasn’t faced failed trades. This is actually the whole idea of the trading process in the Forex world to have as little fails as possible and more wins. By protecting your account you actually avoid taking unnecessary risks and deploy instead an all out effort in maintaining your trading and making the process smooth and easy.
Rule #4: Always study the movement of the Forex markets
Imagine this rule to be an unending class that you have to take on a daily basis in which you constantly learn new things all the time no exceptions allowed. In the world of Forex information is power and knowledge is strength therefore traders are required to keep on learning daily and stay as informed as possible with all the modifications on the trading chart.
By keeping this skill sharp, traders will be able to digest the basic facts faster and also understand how economic reports work across the Forex market. The two biggest skills a trader can develop are focus and observation. Mastering these create solid instincts that will guide you better in the universe of understanding how trading nuances function, how world politics actually work, how events come to influence the trading cross in the chart and most important the pace of the global economies. Try to understand that almost every event has an impact on the trading cross. Always be better prepared and stay sharp and most important never stop learning because in the Forex world information means money, lots of it.
Rule #5: Always keep your risks low in accordance with what you can afford to lose
Placing funds in your account brings great responsibility and that action requires you to be mindful of all your trading actions of buy or sell. We honestly recommend you to always begin trading with a demo account to get a real feel of the trading market and jump to trading with real money only when you feel confident enough to jump in the field.
More important once you feel confident to do so, be sure that you save more than you invest. The Forex market can be very volatile at times and many traders lose a lot of money really fast, truth be told. You must keep your expenses short because the saying “you have to spend money to earn money” is not true. You have to know when and how to act in order to make money. No trader is 100% successful. Everyone is subjected to reason and failure so keep your losses to a minimum.
Traders must have a strong stoic discipline when it comes to managing money and many times you have to be psychologically prepared to lose a portion of your money from your trading account. Traders who earn a lot of money also need to learn how to behave. When you are on a winning spree you taste sweet success and can be seduced into jumping into trading decisions without thinking it out thoroughly.
Rule #6: Trade with facts not fiction
One of the most important rules of being a successful trader is to always take your time in developing the ideal trading strategy best suited for you because it is definitely worth the effort. Always use facts when building your strategy, never use emotions, shy hopes or divine powers because mysticism does not work here. Here you deal with cold mathematical solid facts.
Learning to trade demands a lot of effort and time both of which should be built on a solid base of research and study.
Rule #7: Never be afraid to use a Stop Loss
Trading always involves a lot of risks this is why the stop loss action has been invented so you can pull away from losing funds which can be a whole sum of money or a certain percentage. Both measures work in the same manner and have the sole objective to limit the losses during a failed trade. By using a stop loss you can protect yourself from losing a lot of money.
If you ignore a stop loss alert, even if it turns out to be successful, this is a very bad practice to get used to. Leaving the trading grounds with a stop loss action even if this means losing to the process is still a good thing because you have managed to avoid losing money entirely and can get back at them with better positions on the trading chart. Always protect yourself with all the measures that you have at your disposal.
A stop-loss order is a simple tool, yet so many investors fail to use it. Whether to prevent excessive losses or to lock in profits, nearly all investing styles can benefit from this trade. Think of a stop loss as an insurance policy: you hope you never have to use it, but it’s good to know you have the protection should you need it.
Rule # 8: Never stop trading even when things go bad
Always keep your wits and efforts focused on the big image. In other words, always keep your eyes on the prize. A losing trade should never surprise you. It should be treated as a lesson from which you learn for the future and deploy all efforts in avoiding the second time when it happens.
On the same page we can find that a winning trade is only a small step towards your goal in transforming your trading into consistent profits. Usually by accumulating these successful trades you can enjoy your profits and this is how you will earn lots of money. Never gloat on your success. A trader must first learn how to accept wins and losses and the equilibrium that it brings. Normally emotions need to sit this one out as the overall trading performance is affected greatly by it.
By understanding the relevance of each and every one of these trading rules, and how they function together which will truly aid traders in establishing a solid trading routine. Trading is not easy work and all traders need to have the required discipline, calm of spirit and patience to follow these golden rules which will eventually increase exponentially their odds of success in a highly competitive trading environment. Check out 7 indicators that can make you to become a more profitable trader.