This article looks at some of the rules that you should know about related to currency trading.
When you look at currency trading you should consider some of the rules that you need to trade with. Having these rules will help you be profitable on the market and keep your trading consistent. If you are not profitable or consistent on the market then you are not going to be able to achieve what you want. Keeping these rules in mind when you trade is the best solution to maintain discipline.
Never Lose Your Currency Trading Profits
The first rule that you need to remember is that you should never let your currency trading profits go. This is something that a lot of traders do and this will lead to losses on the market. When you let a winning trade turn into a losing one you are most likely completing emotional trading. You will also not be trading safely or effectively.
Logic Always Wins
There are a lot of traders who want to follow their impulses and instincts when they trade. While this can lead to a certain amount of profit it will lead to losses in the long run. You should always use logic when you are trading because this will ensure that you are not making bad trading decisions. When you trade on your impulses you will be trading emotionally and not consider all the factors of the trade.
Know Your Risk Limit
Having a risk limit that you trade with is very important. If you do not have a risk limit you could be risking and losing more on the market than you can afford. A risk limit will be the amount that you are willing to lose on a trade and during a month. This should be part of your risk and money management plans. Most traders will set their risk limit at 2% per trade and at 6% per month. If you want to set tighter limits then you can.
Technical Entry and Exit Points
When you trade on the forex market you will be able to analyse the market technically and fundamentally. Regardless of the primary analysis that you complete you should always look for your entry and exit points with technical analysis. This will allow you to get the best entry points and exit points. If you do not get the best points then you are going to be limiting the profits that you make and increasing the losses.
Consider the Currency Pair You Use
When you look at the currency pairs that you can use to trade you need to be careful in the selection. You should not only look for currency pairs that suit your trading. You should also look at currency pairs that have paired up strong and weak currencies. This can make the trading that you do much easier and the movements that you need easier to find. If you have a hard time finding the market movements that you should be trading on then you are going to have a hard time trading. Harder to find movements often leads to lower numbers of trade opportunities and this will lead to limited profits.
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