Currency Trading Strategies: 4 Most Important Rules For Both Professional And Novice Forex Traders

Currency Trading Strategies: 4 Most Important Rules For Both Professional And Novice Forex Traders

When you have read a few forex books or visited some online currency trading forums, you can quickly comprehend that there are more or less as many various foreign exchange trading strategies as there are traders. People have their own approach; but more than that, in foreign exchange trading there are many different methods of earning profits.

So there is not one world class currency trading system that you must adopt to make profit from foreign exchange trading. Nevertheless, there are a few principles that apply to the way in which you practice your trading and these are valid for just about anybody. These are the golden rules of trading.

1. Follow The Trends

Most forex trading strategies and systems concentrate on identifying trends and there is simple reason for that. Whether the trend is in an ascent or in a decline, get in to go long or short as adequate and do not go against it. Bucking the trend will see you losing money fast.

2. Safeguard Your Funds

Betting too much on one trade has been the failure of many newbie trader. Never put up too much money on any single trade, however strong your feelings may be that this one cannot go wrong. They can all go wrong.

So how much should you risk? It depends on your strategy and how much it concerns you if you lose all of your capital, but never exceed 5% of your trading capital. 2% per position is a safer option.

Some people maintain the position size as their funds increase, so that they gradually bet more in real terms on every trade. That depends on you but decide about it prudently before you do this. When you have more money in your account, you will quite likely be more dissatisfied if it is decimated, so you may want to maintain the same position size (decreasing your percentage risk) as your balance grows increase.

3. Set Targets For Every Trade

Have a clear profit goal for each trade, so that in advance of when you enter, you have already decided when you want to take the profit and close. Do not be greedy and try to stay in there for more and more.

On the other hand, if it turns bad, do not attempt to hang on in the hope that the market will turn back your way. Cut your losses and exit. Using stop losses to do this on autopilot is a very recommended approach.

4. Don't Bet Completely On Your Own Opinion

Why not? Because most possibly you are not neutral. Let the professionals support you, but always make your own homework. The best way is using forex signals. There are many forex signal providers available on the net, but quite a few of them are scammers. Always examine the track record, as only accurate forex signals will make you money, not the losers!

Those are the first four most important rules of currency trading: the recommendations that can help you create moneymaking currency trading systems.

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