Forex trading rules for beginners. Trading Rules
The market has its own rules. They must be observed by every trader. Read them carefully and be sure to remember. These are the basic Forex trading rules for beginners:
1. Love to lose money! This rule can cause a violent reaction. Some traders will ask: "What does it mean to love to lose money?".
Everything is very simple. You should be calm about the fact that a certain part of your trades will be unprofitable. You need to close hopelessly unprofitable transactions immediately, without thinking for a long time. So you can save a huge capital, and become a good trader.
2. If the deal does not work in either direction (it is in a price flat), it is time to close it. This rule can be attributed to the theory of motion Money. The market moves in a certain direction due to capital. An excess of buy orders moves the market up, and an excess of sell orders moves the market down. If prices stagnate (which happens quite often), this indicates that the market and players are currently happy with the current price.
It is best not to trade at this time. The market is not going anywhere, you will just waste your time, capital and emotional energy. Wait until the market warms up a bit.
3. Try to avoid big losses. Large losses can wipe out all the small profits that you made all day in one fell swoop. In addition, a big loss "kills" a trader from different points of view (emotional and psychological). After such a blow, confidence is restored for a very long time.
4. Manage your capital wisely - do not take risks, do not trade a huge lot. For example, if you have $1,000 on your deposit, then trade a maximum of 0.1 lots. For every thousand dollars, 0.1 lot and only one order of this volume in the market! Also try to use take profits and stop losses.
5. Earn a little, but every day. Set a specific goal for yourself, for example, 30-50 points of profit per day. And strictly follow this rule. You will be surprised how quickly your account will grow if you earn a little every day.
6. Don't count on big wins. Not a single trader who opens a deal in the hope of a big win, did not receive it in the end. You can not treat a trade deal as a possible big win. Sometimes they happen, but more often due to luck, not the skill of the player.
7. Consistency builds control and builds confidence. Agree, it's nice to turn on the computer in the morning with a firm conviction that playing by the rules, discipline and strict adherence to one's own will bring success. This stability will give you great confidence. You will have inner confidence that every day you will earn a certain amount of money. The ability to earn a little every day, as mentioned above, will allow you to control the situation, and your discipline in the future will bring larger profits.
For traders on foreign exchange market there are unspoken rules that it is desirable to follow for all novice speculators. Such observations, rules, conclusions did not appear just like that, but were the result of trial and error of many traders. As a rule, beginners repeat approximately the same path in mastering the market as traders before them.
Some Forex trading rules are more like advice, and therefore, this is the best way to treat them. These are not strict restrictions or axioms, but the observations and conclusions of people who have been familiar with the foreign exchange market for a long time.
Tips regarding the trading process:
- While you are still studying and still not pulling on a professional, underestimate the trading lot. It is advisable to choose the minimum volume of the transaction, which only allows you to set the terminal.
- It is useless to look for ready-made trading system in the network, the use of which will allow you to earn consistently. Much more benefit will be from studying the system you like, in order to create your own strategy in the future, built on the basis of the found TS.
- A pile of indicators on a price chart does not mean that trading will be successful. It has been repeatedly observed that experienced traders completely or partially refuse to use indicators in their work.
- Any trading systems or advisors must first be tested on a demo account and only then used in work on a real deposit.
- You should not change the rules or system settings in the midst of trading. It would be better to stop for new tests or make changes over the weekend. Otherwise, a person runs the risk of simply violating the rules of his system due to emotions that could appear, for example, due to closing a losing position.
Money management tips:
- It is advisable to open a demo account or a bonus deposit first. If you want to trade in real life, let it be a cent account.
- Even if the last few trades were very successful, you should not overestimate the lot for future currency transactions, as a series of losses may soon appear.
- From systems for increasing the lot after an unsuccessful transaction, for example, martingale, it is advisable to refrain.
- Clearly delineate the purpose of the current trade. If you have just entered the market and want to learn how to make money, then there is no reason to choose any other volume of transactions other than the minimum available volume in the terminal.
- If you still do not know how to calculate the optimal MM for your trading, then try not to risk more than 2% of your capital per trade.
- Don't win back by losing some money in a trade. These actions, as a rule, lead to even greater financial losses.
- If you leaked a deposit, then try to distract yourself from trading until you feel that you have calmed down. Now you should look for the cause of the error that led to the loss of capital. Until you find a way to eliminate it, there will be no point in continuing to trade, otherwise a new account will be sent after the first one.
- Do not use in your work in the market borrowed funds. You will always remember about your obligations, which, for sure, will have an impact on your trading. Excessive caution, anxiety about money, oddly enough, can cause new errors.
- It is better not to plan profit for a day, a week, a month. Trade Forex, acting on the signals of your TS. If you didn’t manage to earn as much as you planned this month, it’s okay. Financial planning encourages traders to increase risk and take rash actions.
- The goals that a trader sets for himself must be achievable. This concerns not only the very possibility of achieving what was planned, but also the observance of time intervals. For example, some beginners plan to start earning on the market in 3 months. When the chosen deadline passes, people notice that the goal has not been achieved. Further disappointment or anger at oneself often becomes the reason for overestimating the risks in trading or leaving the foreign exchange market altogether.
Important tips about choosing a brokerage company:
- You should not use the services of young, not reputable companies, even if you are offered unique promotions, bonuses and incredibly small spreads.
- Before registering an account, you should carefully read the broker's regulations to make sure that the company's rules suit us.
- Consider the position of the broker in the rating, as well as pay attention to the reviews of traders about the selected company.
- Having chosen a trading system for work, make sure that it will not violate the rules of the regulations. If the broker prohibits the use of the trading method that we are going to use, we should pay attention to other companies.
- When choosing a company to work on Forex, consider which category of currency speculators this organization received recognition. For example, if a company is in demand among merchants working with cent accounts, and we are interested in a large dollar deposit, then you should pay attention to the broker who has a good reputation in this particular segment that interests us.
In order to become a successful trader, you should know and follow certain forex rules, in fact, these are recommendations that indicate the basic principles of forex trading, they can significantly reduce losses and avoid making ridiculous mistakes.
On the other hand, these are patterns, knowing which you can choose the most successful place to enter the market, or vice versa, refrain from active trading.
This set of forex rules was compiled by more than one generation of traders and includes all the bitter experience of trial and error.
In the process of work, you yourself can create your own rules that will help you organize and become more successful.
1. The market is unpredictable - you can not be 100% sure where the price will go, even if 10 out of 10 factors testify in favor of the trend and all established indicators confirm it. Be prepared for a sharp reversal, which can be caused by many factors.
As practice shows, sometimes even the use of technical analysis methods does not give the desired result; it is also impossible to predict the reaction to the news with a hundred percent probability.
2. Trade only with the trend - no matter how you calculate the value of the correction, it can always end ahead of time, so trend trading always remains less risky and more profitable.
This is the basic forex rule that 99% of all traders follow.
3. The trend has a reason – price change for currency pair never happens by itself, it is always based on a certain factor - news, intervention, an increase in demand or supply.
If you know all the patterns, then success is simply guaranteed to you.
4. Scope of knowledge equals profit – the more you know about forex trading and the more your own trading experience, the more profit you get.
This will be confirmed by any of the professional traders, so for the sake of experiment, take a free training course in one of the Forex DCs, and then compare the results of trading.
5. Everything is interconnected - there is a correlation between almost all instruments, the US dollar is linked to the price of oil, the Australian dollar is growing, if the price of gold rises, look for the relationship and fabulous prospects will open before you.
6. Risk equals profit – the more profit you get from one point, the higher the risk of losing the entire deposit, this trend can be traced quite clearly, it is among the scalpers that the largest number of bankrupts and millionaires.
7. Flat can't last forever - even if only a horizontal price movement is observed for several days, the trend will go up or down anyway, the lull will end and the market will begin dynamic movement.
Do not miss your opportunity to make money on pending orders that are placed outside the support and resistance lines, they will work at the beginning of a dynamic trend.
8. History repeats itself - look at the history of price movements for a period of more than a year and you will notice many interesting coincidences, compare price movements at the beginning of the month and at the end, there are also a lot of similar moments, especially if we consider not the most popular currency pairs.
Forex trading rules play a major role in the implementation of profitable trading, following them, you can build your own system of work and receive a stable income.
Some organizational rules of Forex trading
- Forex trading is only allowed for persons over 18 years of age
- A commission is charged for opening a trade.
- The broker is not responsible for your losses
- Trading on margin carries an increased risk
- Forex profits are taxed
You may be interested in:
The amount of taxes from stock trading -
Forex strategies can be as diverse as the traders who use them. When a trader enters the Forex market, he can develop trading strategy which will best suit his needs, personal characteristics and preferences.
Most courses for beginner Forex traders include general information about the Forex market, but they are often not deep enough to teach novice traders how to avoid trading mistakes. This article will give beginners the five golden rules of currency trading that they need to master before they start taking positions in the Forex market.
The five golden rules of Forex trading listed below will help guide the Forex trader in the right direction. They contain wisdom experienced traders accumulated over the years of work in the foreign exchange market, which you can use to increase the success of your trading.
- Rule number one is to always use a stop loss order to cut potential losses. Reducing losses and maximizing potential profits by limiting the amount of money at risk has always been a top priority for everyone successful trader Forex. A stop loss order is placed below the opening price when buying and above the opening price when selling. In the process of trading, it can move up for long positions (buy) or down for short positions (sell) a sell order. Never move your stop loss order in the direction of increasing the loss.
- Rule number two - When you open a position, you must have a goal to exit the trade. One of the wise sayings of traders is: “Let your profits run”. However, there is no need to go to extremes and endlessly push back the take profit order, it is often advisable to take profit before it turns into a loss, give yourself time to analyze the market and, if the trend resumes, reopen the position. Placing stop loss and take profit orders when opening a position is a great strategy and this practice will save you time, money and frustration.
- Rule number three - do your homework. Applying some sort of analytical discipline to forex market research can give a trader valuable information about when to enter and exit a trade. Forex market analysis is usually divided into technical and fundamental. Technical analysis involves the study of past price patterns on price charts in order to identify certain trends and predict price movements in the future. Fundamental analysis involves studying changes in the economic and political situation in order to determine how a Forex trader should position himself in relation to a particular currency pair.
- Forex trading rule number four - Know when to stay out of the market. The process of trading is associated with a certain adrenaline rush, which can be addictive and lead to one of the most destructive habits for a Forex trader: hyperactivity. Overactivity leads to the fact that a trader opens positions not so much on the basis of analysis and a balanced decision, but out of the need to constantly be in the market. And this, in turn, leads to a catastrophic amount losing trades and, consequently, bankruptcy.
- Rule number five - be disciplined and put your emotions aside. Having a plan and implementing your own trading strategy will help establish the discipline that a Forex trader needs like air. Disciplined, meticulous adherence to the trading plan relieves the trader of emotional reactions when trading and gives him a solid foundation to limit losses and increase profits.
Many online brokers offer demo accounts where you can practice your strategies in real life. market conditions without risking your money. Here you can read how to open a demo account.
Forex trading rules imply a number of basic recommendations, following which you can achieve maximum profit.
All of them can be easily used in real trading, and the result of their application will allow you not only to make a profit, but also to avoid possible losses.
These rules have been developed by traders with many years of active experience in the forex market and have been tested by hundreds of traders.
Trade high only with a leading broker
Basic rules of forex trading.
1. Before you start trading, make a strict plan. What you will follow, it can be a profitable forex strategy, or just a plan of action, taking into account the changing situation.
2. Relax and don't be nervous, you have probably noticed that usually trading on a demo account brings much better results than in real life, this is due to a change in behavior. Imagine that you are trading with virtual money.
3. Always record the result and analyze it, which led to profit or loss.
4. Be sure to place stop orders, and not only stop loss, but also take profit, these conditions are included in the main rules of forex trading.
5. Open buy orders when you receive bad news, and open sell orders when you receive good news, while opening positions when the market reaches the last reaction point.
6. Constantly learn from the experience of other traders and analyze archival materials on the movement of the market.
7. Trade with the trend, this will always lead to success, this way is less risky than trading against the trend.
8. Remember that the main thing when forecasting is to take into account not the indicators of various forex indicators, but the possible reaction of the bulk of traders, it will be the main factor affecting the price.
9. Do not trade on the entire deposit, differentiate transactions, always leave yourself a chance to recoup.
10. Do not open a huge number of orders, this complicates the work and deprives you of the ability to quickly close all positions.
11. Buying is done in an uptrend, selling in a downtrend, remember that you should not open a deal immediately, as soon as a trend has emerged, wait for its confirmation.
12. It is not necessary to memorize all the methodological materials on trading in the foreign exchange market, choose your niche and achieve perfection in it. Only then can you guess with a high probability the direction of the trend.
Forex rules, with their strict implementation, enable even a novice trader to work in the market with a fairly good result and make a profit with a modest investment of their own funds.