Rules that Guide Traders
There are rules to forex trading that must be strictly adhered to if one is to be a successful trader and these are;
-View Forex trading as a business: Don’t see forex trading as a game, betting or gamble. See it as a skilled business that requires discipline, principles, goals, training, and research.
Try to be Realistic when Trading
-Have a realistic expectation of the forex trading: Investing the sum of $100 in the forex trading and expecting a profit of $500 in a month is definitely unrealistic. A realistic trade scenario is when one invests $2,000 to make a profit of $100 to $150 in a month.
-Test your trading plan on a demo account: Trade on a demo account for days (or weeks) to learn strategies that work best for you before trading on a live account.
-Stick to the strategy that works best for you: Finding the right strategy or strategies that ensure successful trades may take weeks, months or years depending on how focused and persistent you are.
Patience is a Virtue, get it
-Be patient: Experienced traders did not get their knowledge and skill overnight. Waiting for the right moment when you need to make a trade is critical in forex trading. This may take some minutes, hours or often times a day. Making one or two successful trade(s) a day is better than making several losses.
Tame your Emotions
-Master your emotions: When trading on a demo account, one’s emotion is hardly triggered at that moment. When trading on a live account with real money, emotions come into play.
However, examples of how emotions come into play in the life of an amateur trader are 1. fear of losing money, 2. excitement of making more and more profits after a successful trade (greed) 3. fear of jumping too late into a trade (which sometimes result into missing the right trade),
4. Anger and aggressive attempt to break even after a loss or losses – emotional reaction to loss (which always lead to greater loss), not knowing when to quit or call it a day.
-Use money specifically set aside for forex trading: Do not use money meant for a specific purpose such as school fees, rent, upkeep, mortgage, savings, projects and so on.
-Avoid using real money for competition: Using the real money for a trading contest is not a good idea. Emotions come into play faster.