10 GOLDEN RULES OF SUCCESSFUL FOREX TRADING

Statistics show that 90 percent of traders lose money in forex trading, 7 percent break even and only 3 percent make money. So if there is such a high rate of casualties what are they not doing that they should be doing?

1.  Trade with money that you can afford to lose. Not with money that you have set aside to loans and bills. Your trading judgement will always be objective if you trade money you can afford to be without.

2.     Learn to stand firm and don’t take your profits too early. Holding on to profitable positions and riding the trends will maximize your gains. Keep your losses small by closing out a losing position immediately you realize you are wrong. Don’t forget to place stop orders for all your trades as in this way you won’t suffer heavy losses.

3.     Never over trade no matter how confident you are and no matter how long your winning streak is. It won’t last and if you over gear yourself the end of a winning streak could break you.

4.     Discipline yourself to half your capital outlay each time you add to a winning position. Don’t make the mistake of doubling up otherwise you will have a top heavy pyramid that could come crashing down around you if the market turned against you.

5.     When things get tough and you are on a losing streak take a break and recharge yourself.

     6. Never put all your eggs in one basket. This could be disastrous. Split your capital into ten equal parts and give yourself more opportunity for success.

    7. It is also dangerous to add to a losing position by averaging. You cannot be certain up to what price the Forex market will go against you. To average you have to double the capital used each time which is foolish. A good trader will cut his loss immediately.

8.     Be wise and remove profits from your trading account and put your winnings in a safe place. If you don’t the chances are good you will lose all your profits again.

9.     If your broker makes a margin call that means that you have made a mistake and have let your position run against you. You must be able to admit you were wrong and close out your losing position before the margin call is made.

10.  Prepare a game plan and stick to it. Decide what you are going to do when you are wrong and what you are going to do when you are right. Finally, decide on how much capital you are going to risk on every trade.