If you have read and understood the introduction in Forex now, you will learn some important trading rules and we are on your way to start creating a solid trading plan.
Do not over-trade
- Yes of course. No one should trade without having the proper means to do so. It really makes no sense as it put the trader in a disadvantaged position even before the trader begins actual trading.
- Beginning traders may wish to use a 1/3 of your total margin only. Do the calculations. Decide if your potential reward is worth the potential risk. If not, look for another trade.
Always use protective stops to limit losses
- The first discipline that any trader should master is to always limit your losses.
- A stop loss order is set to limit a trader's potential loss. The stop loss is placed below the current price (to protect a long position) or above the current price (to protect a short position).
Diversify your portfolio
- Try to avoid "Loading up" in any one commodity or product.
- Don't make trading decisions based on "Fear and Greed", as hard as this may be.
- Make decisions away from the market - "Don't be a screen watcher"
- Don't let ego get in the way
- It means you should always trade in the direction of recent price movement.
- Don't try to pick bottoms or tops
Don't add to losing positions - TARGET OUT!
- You should have specific price levels for both the target and stop.
- Don't feel bad about losing trades. They happen all the time. Just make sure you learn from your mistakes.
Keep it simple, more complicated is not always better
- Trade within your understanding of the markets
- Don't ever risk $2 to make $1
Always be a student and keep learning
- An new trader, will find new ways to learn better and faster.
- One sure way to become a more effective trader is to simply keep learning.
- You must remain stalwart in waiting for your "best" opportunity to enter a position, and agile enough to keep your focus on spotting the next exit signal.
With this type of trading rules, you can confidently utilize and fine tune your trading strategy in a controlled trading environment which focuses on long term success.
Well that's it for the guidelines. I hope you find them useful, informative and most importantly, PROFITABLE!
For more information about trading with ICM Brokers, feel free to visit our website www.ICMBrokers.com