By: Chime Amara
Top Ten Rules For Forex Trading Which Every Trader Should Adhere to.
1. Choose the correct lotsize
Often choosing the correct lotsize based on one's capital is simply the best way of safeguarding against loss. Many traders today loose their investment very often due to excessive greediness which leads to choosing a very lotsize that their accounts can not withstand such whenever the market goes in an opposite direction. Every trader is advised to stick to the lotsize due to his account size.
2. Stick to your trading Strategy
The first thing every trader is expected to develop before trading is a good strategy for trading. This strategy is one that tells the trader when to buy and sell. It equally indicates which pairs to trade and those to avoid. Hence, it goes without saying that to remain successful in Forex Trading, every trader is therefore expected to adhere to his personal trading strategies and avoid trading out of emotions or impulse.
3. Learn how to trade before trading a live account
Very often most traders loose money in forex Trading due to lack of knowledge. Forex Trading a business for the learned and needs proper education and guidance.
4. Do not rush the market
Of course the saying goes “rush into the market without proper predictions and come out empty.” To this end experts believe it is best to wait for the market to return to strong support and resistance before one can enter the market for trading.
5. Be Satisfied with your profits
It is one thing to make profits and another to be satisfied with the amount of profits made at a single trade. Some traders often refrained from taking profits till the market gives them at least double of their capital. Well this is not always the best as there could be some pullbacks before such targets are achieved. It is therefore very necessary for a trader to take profits and wait for another good entry.
6. Have a reason for entering any trade
Having a reason for entering the market calls for discipline while trading. Some beginner traders often dived into the market taking either position without any analysis. This is really a very bad approach to trading.
7. Analyze the market before taking any decision
A wise trader is always expected to carry out proper market technical and fundamental analysis before taking any position in the market. With proper technical and fundamental analysis put into play, it becomes very easy to predict the market direction.
8. Have a set trading days and hours
Notwithstanding the fact that the market is open for trading virtually 24hrs a day, 5 days in a week and 28days in a month, yet every trader must learn that not every minute is a good entry time into the market and not every day is good for testing his strategy. Often not trading is a very good strategy for catching the best entry into the market.
9. Invest only the amount you can afford to loose.
Forex Trading no doubt involves risk and the risk involved could even exceed ones capital. To this end, it is very necessary for one to invest only the amount he/she can afford to loose in case of excessive loss. The only way to survive the risk exposure is using the correct lotsize and applying stoploss when entering any position in the market.
10. Choose a good broker
Finally choosing a good broker is a rule that seeks to protect the interest of the trader. This is because some brokers could be mischievous. There are some brokers known to set the market frequently against the trader causing them excessive loses. Other brokers often made it difficult to withdraw capital and profits after initial deposits. Hence it is a fundamental rule that every trader must take time to sort out the most suitable broker to trade with.
To choose the best broker for trading every South African trader is advised to visit wikifx.com a global independent forex regulator and find out their recommended broker for trading in their country especially here in South Africa.
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