Every trader is aimed at gaining profit, therefore wishing to know the best entry and exit points for the deal. We also know that trading is a kind of business, which always involves risk and therefore, requires risk management. These issues are determined by a trading strategy selected by a trader.
Trading strategy is a plan of action, adjusted to the peculiarities of a market and a trader.
Today, however we will speak about 7 golden rules, which will help a trader save money on a deposit and at the same time, gain profit.
A trader can use these rules in his/her trading strategy in order to achieve better success in trading. These rules can be applied not only in Forex, but in any financial market.
The rules can be used both the beginners and experienced traders.
Seven golden rules of a trader!
Your trading decisions shall be well deduced. A trader cannot just enter the terminal, look at the chart and open a position. It will be a waste of time and money. Your trading decisions shall be based on the signals of the indicators and oscillators and on the data of the fundamental analysis. This is the only way to conduct trade.
Use moderate margins in your trading. Do not try to use the largest leverage even for the trades, which seem lossless. A trader shall never forget that trading in the Forex market always involves risks. If you are a beginner we recommend you to use leverage size 1:100, but not higher.
Do not use all amount of your deposit for trading. Use just 20-30% of your capital for trading and leave the rest of the money as a deposit. Such risk diversification will serve you well and help to save your funds.
You must have an alternative access to the terminal and Internet. So that in the event of a power cut or a line breakdown, you can close your trades. This is very important considering that non-trading problems cause a lot of losses in the market.
Exit a trade if the correction lasts longer than you expected. Do not be greedy as you can lose what you have already earned. Usually the beginners do it, as they continue to believe that the price will resume the trend. Just close your trade and get your profit.
Be patient and wait for the strong trend of price. Trading in trends is the most profitable and safe way of trading. First of all, market is more predictable during the strong trend, which encourages to trade even the beginners. Otherwise, during the flat market a trader needs to analyze market thoroughly and make quick trading decisions. The same refers to the weak trend. If trends change very often, market is instable. In this case it is better to wait till volatility reduces and a strong trend develops.
A trader shall always place stop-orders and take-profits. For a professional trader these two orders just a must. Stop-loss is a tool enabling you to leave the market maintaining the highest profit. This pending order is always appropriate due to its “guarding” functions. Just place this order. Take profit orders show what a trader expects from a trade. Take profit enables a trader to determine entry and exit points and the size of the possible profit.
The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.