Do you know that a huge number of Forex traders are in trouble? Do you really know the cause of such a predicament? Many even regret knowing the existence of FX, do you know why? Is it because they were not informed about it? Or is it that they ignored to digest the dos and don’ts of Forex market?
There is a saying that says, when you are informed you are reformed and when you are not informed you are deformed. Many of us today, especially beginners always engross ourselves with the mindset of gaining and have also forgotten the fact that we have to digest what it takes to make a great achievement.
Of course every one reason of entering the Forex market is to make a profit. So if you really want to be a proficient FX trader and never want to regret entering into Forex, then you really need to work hard on obeying the rules.
Do you want to change gear in forex? It is obvious that you may have read an article related to this but I am convinced that this article will change your mindset of confusion in forex into confidence. Here are the 5 rules:
#1 THOU SHALL TRADE FIRST WITH A DEMO ACCOUNT
This is one of the most powerful rules every beginner must digest. It is a fact that practice makes one perfect. One thing that helped me understand forex better is by trading with a demo account.
A demo account is an account you open with a broker which is credited with virtual money (not real money). It is an account that enables you to participate and practice forex trade.
Most of the forex institutions today will always tell you to start by practicing with a demo account and trade profitably for at least three months before opening a real account with an active/ real broker.
Do not get deceived by some funny people as there is no shortcut in forex trading. This has worked for me and I believe it will work for you. It is better if you crawl in learning forex than run, because those who run do not know when the rules change behind them and they end up missing their target.
#2THOU SHALL NOT RISK MORE MONEY THAN THOU SHALL AFFORD TO LOOSE
This is an active tip that every beginner needs to understand. Do not invest so much that eventually it is a sum you cannot afford to lose. To be sincere with you every trader must lose money to make money. Don’t be scared or discouraged about this.
Why do I invest when am bound to lose?
No!!! That is not the spirit: those who lose are those who see forex as a game and not those who see it as a top life changing business that can really change your financial status for life.
So please do not be scared: anyone who enters the forex market with a mind-set of making profit will definitely make it.
This rule is really advisable to follow. For instance, you have about 1000USD, and you can start by investing 200USD. It helps curb unforeseen financial risks in FX-trade.
#3 THOU SHALL NOT LOSE MORE THAN 2% -3% OF YOUR MARGIN ACCOUNT ON A SINGLE TRADE
This is a helpful tip for you newbie’s in FX-trade, do not lose more than 2% -3% of your equity at your first trade.
This tip is one of the measures that will help you control your loss in forex. For instance, if you have a balance equity of 100USD, when engaged in a trade you are not expected to lose more than 2-3USD.
Many people tend at times to go against this rule which brings them nothing but loss or little profit.
Realistically, this is one of the tips that have made a lot of traders successful today.
#4THOU SHALL ALWAYS USE A STOP LOSS ORDER.
Do you know how powerful this stop loss order is? To be honest it has saved a lot of traders from potential losses. For you to be able to control your loss as a beginner when executing an order in forex is by placing a stop loss order.
It is a designed package on your trading platform that enables you to estimate or define your risk when the market moves against you. Before carrying out this process of placing your stop loss, your must really observe an intensive study on the market movement so as not to be a victim of it.
For instance, if you are a short-term trader, using a candle stick pattern and the market is studied to be on the buying region, where your moving average of 5 (yellow) is crossing the moving average of 10(red) and moving average of 15(blue) upward. The parabolic SAR lies below the candle sticks and the moving averages which definitely signifies buying signal.
Considering the currency pair to be EUR/USD, let’s assume that EUR is around 1.5600, where do you think is best to place stop loss? Of course it will be advisable to place your stop loss at 7-10 pips (price interest points) below, 1.5590 depending on the lots size and your balance equity.
When you carry out your calculations well, you are on a safer side because you just defined your risk by telling yourself how much you want to lose.
#5THOU SHALL NOT LET THY EMOTION RULE
This is one of the most powerful of all to keep. Most of the traders today both beginner and expert finds it really hard to keep. The truth is that it is possible. You can really control your emotions if you want to.
Allowing your emotion to be in charge of you is to be carried away by your feelings, which will definitely make you weak in FX. It’s crystal clear that someone who is emotional will not really go far because he or she will be unable to unlock their real potentials.
We are humans and it’s natural for us to be emotional. Don’t feel bad when you find it hard to control, but try to possess the mindset of setting things straight by following the rules of the Forex Trading.
I hope you are a little bit convinced and I believe that these active rules will definitely help beginners and even FX practitioners who are still finding it difficult to go far in this multi trillion business.
Ejiofor Francis is an experienced business advisor, who enjoys exploring growth opportunities for businesses. He mostly writes about Forex Trading articles, he is also an expert in business writing and has a huge interest in social media’s, especially twitter.
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