Common Guideline On Forex Trading

Educated Yourself:

" This is a high risk business! period! ... "

" This is not a quick way to get rich! Double periods!! ... "

" This is not Money Hunting or Find The Jackpot Game ... "

Please keep in mind, if you are new to the subject of Forex, not to jump blindly into trading. Get yourself some educations, attend seminars or Forex classes and use the DEMO ACCOUNT(never use real money first) to get yourself familiar with the market movements, your trading software and tools.

Plan your trade and trade your plan:

If you fail to plan then you plan to fail! You must have a trading plan to succeed. A trading plan should consist of a position, why you enter, stop loss point, profit taking level, plus a sound money management strategy. A good plan will remove all the emotions from your trades.

The trend is your friend:

Do not buck the trend. When the market is bullish, go long. On the reverse, if the market is bearish, you short. Never go against the trend.

Focus on capital preservation:

This is the most important step that you must take when you deal with your trading capital. You main goal is to preserve the capital. Do not trade more than 10% of your deposit in a single trade. For example, if your total deposit is $10,000, every trade should limit to $1000. If you don't do this, you'll be out of the market very soon.

Know when to cut loss:

If a trade goes against you, sell it and let go. Do not hold on to a bad trade hoping that the price will go up. Most likely, you end up losing more money. Before you enter a trade, decide your stop loss price, a price where you must sell when the trade turns sour. It depends on your risk profile as of how much you should set for the stop loss.

Take profit when the trade is good:

Before entering a trade, decide how much profit you are willing to take. When a trade turns out to be good, take the profit. You can take profit all at one go, or take profit in stages. When you've recovered your trading cost, you have nothing to lose. Sit tight and watch the profit run.

Be emotionless:

Two biggest emotions in trading: greed and fear. Do not let greed and fear influence your trade. Trading is a mechanical process and it's not for the emotional ones. As Dr. Alexander Elder said in his book "Trading For A Living", if you sit in front of a successful trader and observe how he trades, you might not be able to tell whether he is making or losing money. That's how emotionally stable a successful trader is.

Do not trade based on a tip from a friend or broker:

Trade only when you have done your own research and analysis. Be an informed trader.

Keep a trading journal:

When you buy a currency or stock, write down the reasons why you buy, and your feelings at that time. You do the same when you sell. Analyze and write down the mistakes you've made, as well as things that you've done right. By referring to your trading journal, you learn from your past mistakes. Improve on your mistakes, keep learning and keep improving.

When in doubt, stay out:

When you have doubt and not sure where the market or stock is going, stay on the sideline. Sometimes, doing nothing is the best thing to do.

Do not overtrade:

If you have too many positions, you tend to be out of control and make emotional decisions when there is a change in market. Do not trade for the sake of trading.

Take a rest:

Do not push yourself too hard! Take a rest! Eat well! Go out and play! Spare times with your family or beloved ones!

This last one sounds childish?

Hey! That is why Market closed on every weekend!!!

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