These are a few rules that are important in assiting a trader be a winner |
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| By: Mike Morris | ||||
Number 1. Forex is not a casino were you roll the dice If you want to gamble you go to Las Vegas or Atlantic City. If you make spontaneous conclusions with no regards to signals, trends, fundamental and additional factors you are gambling. A true trader has planned out the trades before he executes them Any trades on hunches, instincts or gut feelings are gambling, you may get lucky or you may not. But it’s a good way to have a short trading career. Number 2. Paper trading gives valuable lessons Allow a sensible period of time to learn more about Forex and the particular Forex trading program and platform you will be using. There is plenty of time to put money at risk The more information you gain the more probable you are to be successful. Paper trading gives you time to try strategies, improve your skills and learn the software program Blunders made while paper trading can turn into valuable lessons Number 3. Don't fight the trend or the trend is your friend No one can pick tops or bottoms and trading with the trend increases you chances of success. Going against the trend takes much skill and are lower percentage winning trades. Get on the train in whichever way it’s heading. Number 4. Learning technical analysis is useful. The market trades on technical analysis and most traders follow it, that’s why it works. Read some books on technical analysis and the markets themselves. This insight will help your trading and give you new skills. Number 5. Don't risk too much capital on a single trade A good guideline is 3 to 4% of your capital. Even if a trade goes terribly wrong, you will not blow up your account and will be able to trade another day and recovering any loses won't be as difficult. Number 6. Stop loses exist because they should always be used Execute you stop loss at the same time your trade. When a trade does not pan out your losses are limited. Numerous traders use 8% as their stop loss limit It all is dependent on your time frame, amount in your account, how good the signals that were produced, tolerance for risk, etc. Use a stop loss no matter what the situation Number 7. Always look at different time frames that the one you trading. Looking at different time frame will give you a different viewpoint on the trend. If your are trading the 5 minute chart, look at the 15 and 60 minute to get a broader perspective. You need to look at both the trees and the forest. Number 8. Leave emotions out of trading If I had to pick one traits that is the demise of more trader it would be emotions. They have no place in trading and you need to base your trades on technical’s and fundamentals, not on how you feel. Number 9. Don’t fall in love with any trade. Before getting in any trade clearly have your entry price, profit objective and stop loss defined. Plan on perhaps scaling out of your position at certain profit points. When it reaches your profit objective exit the trade, positions can reverse quickly Number 10. Trade the time frame that is correct for you Different time frames calls for different personalities and psychological makeups. Not all can be a good scalper or minute chart trader. Select the time frame you consider is best and most comfortable for you. It is important that a trader continuously learns and adjusts. A trader that follows his system without making exceptions is usually a successful trader. |
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| Article Source: http://yourfinance.co.za | ||||
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