Today, I'd like to talk to you about a few very important rules for investing in the Forex market. If you stick to these rules, you will almost certainly win in the long run.
Rule #1 is to never put more money at risk than you can afford to lose. No trader is perfect, so you're going to make some trades that don't work out. There is no way to learn a system that always wins. So you should expect to lose money.
Rule 2 is to cut your losses short and let your wins add up to bigger profits. You won't lose your shirt if you consistently use stop loss orders and don't let your emotions control your trading. It's better to lose a small amount and get out of a trade than to keep hoping things will get better and lose a lot. You can usually tell right away if your trade is going in the right direction if you are using the right techniques and strategies. If it isn't, you should leave the trade. There are always more chances to try again and get into the market. So don't let your feelings get in the way of your trading.
Rule 3 is to always use stop loss orders. This is probably the most important rule in Forex trading. Before you even think about making a trade, you should have a good idea of when you think a trade might be going in the wrong direction. Set your stop loss order and entry order at that point. So, you automatically stop a possible loss from getting worse. Stop-loss orders cost nothing. They won't cost you anything, and they may save you more than just your peace of mind.
Rule 4 is to know where you will get out of a trade before you get into it. This is true for many good reasons. When you trade in real time, it's easy to get caught up in all the excitement and lose track of what you're doing. If you don't know when you're going to leave, you're much more likely to make a bad choice.
The fifth rule is to know when to stop. Don't risk your money on games of chance. If you have a string of bad luck, stop trading for real money and practise with a demo account until you feel better.
