What Are The Rules Of A Successful Forex Trader

The Forex market has changed through the years, growing in volume and expanding across multiple time zones.

Brokerage houses have changed, too, going online with sophisticated software and powerful servers.

Economic indicators and technical analysis have become more sophisticated, too, until the Forex market of today doesn’t look anything like it used to.

One thing that hasn’t changed much is the fact that most forex traders lose.

Despite all the advances in the Forex marketplace, the ratio of winners to losers remains low. Experts agree that the most hopeful number that can be advanced is a measly 10%, which means that 90% of all traders on any particular day will lose.

Experts also agree that the reason most traders lose is because they allow their emotions to cloud their judgment.

Most people trade on hope and fear, rather than facts. Rather than basing their trades on what the candle charts and indicators actually say, these people trade on what they want them to say. They hang onto a losing position and follow the chart down, hoping their currency pair will change direction. Or they exit a trade too soon, leaving profits on the table, fearing the trend won’t last, and are satisfied with pennies that even the best Forex money management cannot balance against their losses.

Other people lose through greed, by trying to pick the highs and lows too nicely to maximize their profits to the penny. Rather than waiting to place a trade when the candle chart patterns confirm the market’s movement, they jump in too soon and are disappointed when the anticipated break-out never occurs.

Remember, there is no magic software system or guaranteed trading system. If you cannot control your emotions, then you cannot become a winner, thats just the way it is. But there are things you can do to improve your chances of being one of the winners, and the most powerful is to follow these rules of Forex trading:

Have a trading plan, using good forex money management skills and the candlestick chart trading strategy of your choice—then trade your plan. Don’t change your trading plan or loosen your criteria if you don’t see a good trade for a few days; wait for the market before risking your money. Remember the law of averages, and sooner or later, the market will come around.

Use stops, and trailing stops when possible, to control losses and protect your profits. Remember to set your stops far enough away from the entry price so that you aren’t closed out by normal market jitters.

Trade with a paper trading demo account until you feel comfortable trading in the market.

When you move on and start trading with real money, it feels different than paper trading! This is no time to change what you’ve been doing. To minimize the effects of emotion, set a small, realistic initial goal and trade until you achieve your goal more often than not. Use small sums in micro or mini accounts. Only when you are comfortable risking your cash and sometimes losing it should you to trade with larger sums of money.

Study your forex trading record and try to figure out why you lost money. To put it simply, learn from your mistakes. That alone will put you ahead of the crowd!

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