– Rule One: Demo Account First, when you start thinking to enter Forex trading, everyone must open a demo account and trade with virtual money before starting to trade with their real money, as the movement of the markets must be well understood.
– Rule Two:
Never risk an amount greater than you can afford to lose, because you will inevitably lose some money as is the case with most traders, as the loss is part of the world of Forex and cannot be completely avoided, as there is no absolute profit and no 100% expectations for the success of a trade, the Forex market is known for its volatile nature a lot, managing capital properly is part of risk management and you must know the amount of the transaction size relative to the amount of your trading account.
– Rule Three:
Always use a stop-loss order, as it is the easiest way to exit any trade with minimal losses and adds more protection to the trader's account and reduces risk as the stop-loss order can be adjusted at any time when the trade is open, which is of two types, fixed stop loss and trailing stop.
– Rule Four:
Be aware of the exit point before you enter a trade, it seems at first glance that finding a good entry and exit point is difficult and the importance of determining the entry and exit points of each trade lies in determining the profit or loss, determining the exit points of trades in advance helps in managing the risk of your trading account.
– Rule Five:
Take a break when your balance declines significantly, the Forex market is more volatile and affected by news than the stock market, so some traders feel frustrated when they lose and return to take revenge on the market by opening random and completely ill-considered trades, and this is the biggest mistake that most traders, especially beginners, make.
– Rule Six:
Do not let your feelings control you, stay vigilant, calm and able to collect your thoughts, the psychological state of the trader is one of the basic ingredients for the success of the trading process, so the psychological state of traders must be stable and since trading is a business that contains risks, the psychology of traders must be disturbed because of that, giving in to emotion and feelings may eventually lead to the loss of the account or the loss of trading opportunities that you did not seize.
What emotions should be avoided while trading?
Patience and a pure mind are the ones who win the game, traders should avoid fear of trading and lack of understanding of the chart, multiple trading strategies, technical indicators and economic news, greed to increase profits exaggeratedly, anxiety about making the right decision to enter and exit the deal, hope to make large profits and that all trading strategies will achieve 100% profits, regret about entering the trade late or withdrawing from the deal soon and did not achieve the desired goal.
Tags:
Forex