If you are a forex trader, you have probably heard whole lot of different trading advice, trading rules, and etc. In actuality, there are several general rules when it comes down to trading forex. Unfortunately, most traders, especially the newbie traders who are just starting out in the forex market, will break these rules. Part of the process of education is breaking rules and making mistakes. In doing so, a trader will ultimately form their own personal trading skills, and they’ll also develop their own personal set of trading rules and laws. They, in the long run, will bring you to success.
Before you can even start thinking about developing your own personal set of forex trading rules and guidelines, you have to thoroughly evaluate your knowledge of the industry. Some people prematurely feel that they have acquired all of the necessary knowledge they will ever need in order to become successful forex traders. Unfortunately, more often than not, this is not the case.
It always seems to come back to proper and thorough forex training. The best forex training involves educating yourself or hiring someone else to educate you on each and every aspect of everything trading forex entails. Luckily, there are general recommended factors that can help you on your journey to becoming a successful forex trader.
Here are some general recommendations to help you avoid large losses in your first stages of trading forex:
When you are first starting out, decide on the specific amount of money you want to use to begin your initial forex trading with. This amount of money must be an amount you are willing to risk losing.
When trading, you should never use any more than 10% of your initial deposit. Never used borrowed or loaned money for trading forex, always use your own means.
Never make too many transactions at the same time. Doing so will increase your possibilities of making mistakes.
Never work against the general trend. Always analyze at least 2 sources of information (i.e. news and graphic analysis) Also, always be sure to analyze the situation before you enter the market. Never change your opinion based on forecasts of other people when your position is already open.
Never practice “emotional” trading, and always rest of at least 24 hours after you either make a large profit or suffer a large loss.
Continue to practice and maintain and even improve your level of discipline. Also continue improving your normal, stable professional estimation of your possibilities.
If you don’t know when you have to close a transaction with losses or when you have to fix the profit, do not make the transaction.
Be sure to install the stop loss in order to cut your losses. Also, install the take profit to fix profits. Your take profit should be at least twice as large as your stop loss.
Do not use the “lock” method if you do not understand what it is.
Those are just some general recommendations for those who may just be starting out in the forex market.