10 golden rules about Forex
The truth about Forex is that it can be an intense and stressful undertaking that requires a strong control over your emotions. Forex is not a "get rich quick" scheme. Learning to trade Forex takes patience – it will take you time before you master the basics. Those who lack discipline or make decisions that are not carefully thought through will quickly find themselves in a negative investment position. Those who do not adhere to sound investment principles, or who allow emotion to govern their thinking, will quickly find themselves losing a grip on their investments. However, those who follow sound investment principles will reap the benefits of one of the world's most liquid and influential markets.
A 100% return on investment within a couple of days wouldn't surprise anyone, and in fact 1000% wouldn't surprise an experienced trader. Because of this, Forex has become one of the most sought after and talked about investment opportunities. As in any industry, Forex has its own nature and golden rules. Learn Forex, understand the keys to success, and make your investment decisions wisely. This short book will introduce you to the 10 golden rules of Forex trading that every person entering this exciting market should follow in order to become successful.
1. The market is always changing and it may be hard to understand and keep up with these changes unless you invest in a good Forex trading education.
2. There are many beginners who make trades in any direction. While there is a possibility to make profits both on the upside and downside of a trade, trading in the direction of the trend will give you the best chances for success.
3. Make a demo account, and use it to learn and understand Forex trading. While using a demo account you will be able to test your trading strategies and mentally prepare yourself for real trading. However, keep in mind that you should be realistic and treat your demo funds as real money; otherwise, there is no way you can learn from demo trades.
4. While there are a lot of companies who are earning money by selling software which aims to predict future trends, the reality is that if this software really worked, these companies would not be giving the secret away.
5. Trading is stressful work, and there will be a lot of setbacks on your way to the peak. Emotional trading may force you to open a trade too early and eventually lead to a loss due to a wrong entry point. Control your emotions by staying cool and calm, and focus on your long-term goals.
6. Just because the Forex market is online twenty-four hours a day does not mean that you have to trade all that time. If you are doubtful, do not trade at all. Instead, analyze the market and use the knowledge you get to make more profitable trades in the future.
7. Because trading is always full of emotions, you must have a trading strategy which includes a set of rules you stick to, this will help protect you from yourself.
8. Avoid trading strategies which are too complex to understand and which use a lot of different techniques. They can distort your judgment and you will miss a lot of good trading opportunities.
9. Leverage - Forex trading has large potential rewards, but also involves large potential risks. As a novice, don’t risk more than 1–2% of your margin account on any given trade. Over the long run, this will give you a chance to make a profit while reducing the probability of taking a loss.
10. Develop a habit of reviewing and analyzing your good and bad trades. Then, you will have a much better sense of what will work best in your future trades.