The Do's and Dont's in Forex
If you really want to know the secret of trading forex successfully then here it is: there are no secrets. There are skills which you have to master just like in any other profession. If you ask any professional trader, he or she will tell you that forex trading is a business. To make a business profitable you need a good business plan and a range of skills to execute the business plan.
To become a successful forex trader is very simple but it is far from easy. First you must choose a trading strategy that works well for you and suits your personality. You must develop a formal Trading Plan which should include position size, entry, exit, stop loss and profit taking rules. Before trading in a live account, practice your strategy according to your plan on a demo account for few weeks. Once you are comfortable with the strategy, trade accordingly and repeat it over and over again. The key word here is discipline. You have to become a disciplined forex trader to trade and profit from the market consistently.
Things to Do
Always trade with the trend.
Always calculate your risk-reward ratio before entering a trade and try to maximize reward relative to risk.
Trade only when the markets are highly liquid, which is most of the time in the FX market.
Always use a stop loss.
Let your profits run.
Set and keep to a maximum daily loss amount, after which you must stop trading for the day.
Never quit, and learn from your mistakes to continually improve.
Things NOT to Do
Don’t trade beyond your risk profile and comfort zone.
Don’t hesitate to initiate and exit your positions.
Don’t over-trade (too many or too large of trades).
Don’t move your stop loss.
Don’t let your emotions cause you to deviate from your Trading Plan.
Don’t try to get revenge from the market when in a losing position.
Don’t trade when you are not feeling well or cannot concentrate.
The 7 Biggest Trading Mistakes You Can Avoid
1.Not learning and educating oneself about the forex market and trading.
2.Not having adequate capital to begin trading.
3.Not treating forex trading as a business.
4.Trying to become rich in one day or a short period of time.
5.Not trading according to a Trading Plan or not having a Trading Plan at all.
6.Trying to teach the market a lesson when in a losing position.
7.Starting to gamble when feeling low or bored.