10 Forex Trading Rules

Hi when you trade in Forex you need to keep in mind the next rules so your trading will be much easier. Remember no rule is ever absolute, except the one about always using a stop. These rules work well across a variety market conditions, and will keep you safe.

1. Never Let a Winner Turn into a Loser: The FX markets can move fast, with gains turning into losses in a matter of minutes, making it critical to properly manage your capital. You can protect your profits by using trailing stops and trading more than one lot.
2. Logic Wins; Impulse Kills: Reason always trumps impulse because logically focused traders will know how to limit their losses, while impulsive traders are never more than one trade away from total bankruptcy.
3. Never Risk More Than 2% Per Trade: This is the most common and most violated rule in trading. By setting a 2% stop-loss for each trade, you would have to sustain 10 consecutive losing trades in a row to lose 20% of your account.
4. Use Both Technical And Fundamental Analysis: Both methods are important and have a hand in impacting price action. Fundamentals are good at dictating the broad themes in the market that can last for weeks months or even years. Technicals can change quickly and are useful for identifying specific entry and exit levels.
5. Always Pair Strong With Weak: Because strength and weakness can last for some time as economic trends evolve, pairing the strong with the weak currency is one of the best ways for traders to gain an edge in the currency market.
6. Being Right And Early Means You Are Wrong: If the price action moves against you, even if the reasons for your trade remain valid, trust your eyes, respect the market and take a modest stop. In the currency market, being right and being early is the same as being wrong.
7. Differentiate Between Scaling In And Adding To A Loser: The difference between adding to a loser and scaling in is your initial intent before you place the trade. Adding to a losing position that has gone beyond the point of your original risk is the wrong way to trade. There are, however, times when adding to a losing position is the right way to trade.
8. What Is Mathematically Optimal Is Psychologically Impossible: Why? Because trading is not logical but psychological in nature, and emotion will always overwhelm the intellect in the end. Conventional wisdom in the markets is that traders should always trade with a 2:1 reward-to-risk ratio, the trader can be wrong 6.5 times out of 10 and still make money.
9. Risk Can Be Predetermined; Reward Is Unpredictable: Before entering every trade, you must know your pain threshold. You need to figure out what the worst-case scenario is and place your stop based on a monetary or technical level. Every trade, no matter how certain you are of its outcome, is an educated guess. Nothing is certain in trading.
10. No Excuses, Ever: The "no excuses" rule is applicable to those times when the trader does not understand the price action of the markets. It's acceptable to sustain a drawdown of 10% if it was the result of five consecutive losing trades that were stopped out at a 2% loss each. However, it is inexcusable to lose 10% on one trade because the trader refused to cut his losses.
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