To be successful in the foreign currency markets you must be able to follow a proven recipe and adapt to all of the variables that can be thrown at you during any given trading day. It is inevitable that you will make some bad trades from time to time. Even the best traders make bad trades. But the question you need to ask yourself is have you learned from your mistakes? It can be easy to be short-sighted when gold trading, but you can’t get too high or too low at any given time.
Here, we explore 5 timeless rules that are an important part of successful trading, no matter the techniques, markets or time frames you trade. Equidious Forex Signals follows these rules while providing the signals to their clients.
1. Treat trading like a business
Like any business, trading incurs expenses, losses, taxes, uncertainty and risk, and these factors must be taken into account. The key to developing a successful trading business is good planning, both for the overall business and for the actual trading. Traders who want to weather the learning curve and stay in the industry for the long haul will put in the time and effort to research and develop strategic plans that encompass short- and long-term goals and the details of trading: What will be traded and how it will be traded.
2. Always use a trading plan
Plan Your Trade — is accomplished through a trading plan: A written set of rules that defines entry, exit and money management criteria. Good trading plans often are based on experience or market observations and developed through research and exhaustive testing. While it is time-consuming and challenging to develop a profitable plan, a major advantage is the consistency it delivers. Trade Your Plan — for many traders, as difficult as developing a trading plan. Trade your plan means following your trading plan exactly, without making excuses, second-guessing or otherwise deviating from the rules that were so painstakingly created. Taking trades that fall outside the plan is considered bad trading, even if they turn out to be profitable.
3.Risk only what you can afford to lose
While traders plan on making money (that’s why people trade, after all), it is important to acknowledge that it does not always work out that way. It is essential that the money used to fund a trading account be what can be lost without impeding the ability to meet other financial obligations. Losing money is difficult enough, but it is even more so if it is capital that never should have been risked in the beginning.
4. Manage risk and protect capital
Properly managing risk and protecting trading capital is what keeps traders in the game. They also should avoid risking too much on any single trade. The generally accepted industry standard is to risk no more than 2% on any single trade. Many traders with smaller accounts find this limits their ability to make substantial profits and may, as a result, risk far more. All it would take is a series of losing trades to destroy the account. Trading with a stop loss is another way to manage risk and protect capital. A stop loss limits the risk that a trader is exposed to for each trade. We all would like to always exit with a profit, but that is not realistic. Because losing trades are inevitable, it makes sense to know how big those trades are going to be. If the trade moves in the wrong direction, it is closed and the trader moves on to the next opportunity. Being undercapitalized — not having enough money — is perhaps the primary reason why many traders fail. This is for a couple of reasons. One is that traders need money to make money. Imagine a trader makes a 30% gain in one year. That might be enough to live off if it’s based on a $200,000 account. However, 30% of a $5,000 account is not enough to pay the bills. Being undercapitalized also is detrimental because it becomes impossible to withstand the inevitable drawdowns. Again, it wouldn’t take many losing trades in a row to wipe out a small account.
5. Keep trading in perspective
While it is important to remain focused each and every trading day, it is equally important to remain focused on the big picture. One losing trade (or day) should not be a surprise. It is a part of trading. Nor should one winning trade (or day) be cause for a celebration. It’s just one step along the path to long-term profitability. Because trading is a business, it is the cumulative profits that matter.Win or lose, trading is just another day at the office. Once a trader accepts that wins and losses are part of the business, it is easier to keep emotions in check.Setting realistic goals is an essential part of keeping trading in perspective. If a trader has a small trading account, for example, it would not be reasonable to expect huge returns: a 30% return on a $5,000 account is much different than a 30% return on a $1 million account. It is helpful to remember that the multimillion-dollar traders are the exception, not the norm. Most traders who survive the tough part of the learning curve are able to make a comfortable living.
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For the Best Forex Signal | Accurate Account Management | Profitable Comex Signals, Try Equidious Forex Signals. We have a team of best and well experienced Research Analysts. Trading is an art of making handsome amount.
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