Just as there are rules and guidelines for currency trading systems when you are learning how to make money on the currency market, there are also guidelines for handling the personal factors and traits that hamper our success. Here are six golden rules for handling ourselves so that we can move smoothly from doubting novice to consistently profitable forex trader.
1. Keep Cool
Successful traders do not allow their trading be influenced by their emotions or their emotions be influenced by their trading. They do not risk more because they are feeling lucky, they do not hesitate when the signs are right, or close a trade too early out of fear. Indifferently, they are unlikely to celebrate a gain, nor will they sulk, shout or kick the dog when they lose.
An individual who is influenced by his or her emotions will not succeed as a forex market trader. Self discipline can be learned but make sure that you have totally mastered your emotions on a simulation account before you think of going live. If you are still taking unacceptably high risks you are not ready for real trading.
2. Think For Yourself
Different traders have different techniques. This means there is limited value in getting guidance from anybody else. Actually, except you know that the person follows the same system and techniques, the advice is probably useless to you.
Do not copy somebody else's strategy just because they seem to be earning money with it. Do your own research and analyze everything that you are told. Even then, consider carefully before dumping the system that you have followed before. There may be factors that you have not taken into account. Something that works for somebody else may not consequently work for you.
3. Keep Records
Keep a spreadsheet detailing each trade so that you can see patterns in your own trading activity. You do not inevitably have to use it to change anything, but refer to it often to remember of the lot of small trades that add up to success or failure.
What should you record? At a minimum, the currency cross, your position and the opening and closing prices. However, these bare facts would be much more explanatory if you can also add why you entered the position. Did it fit the criteria of your system? What made you anticipate that the trend would go your way? With the benefit of hindsight you will have a much better perspective of why your trading history is going well or not so well.
4. If In Doubt, Stay Out
Do not open a trade if you are hesitant or uncertain about it, assuming of course that you have a reason different than fear for your hesitation. A trade can only go one way or the other, so if it is not exactly right, it is wrong. Sit tight. There will be a lot of better opportunities.
5. Limit Your Trades
Do not be drawn into thinking that you must never miss an opportunity. You do not have to be on top of a lot of different currency crosses and jump into every market regardless of what else you could be doing.
6. Don't lean only on your own judgement
Even if you are not a newbie trader, don't think you are unfailing. Find a good forex signal provider, who would cater to you reliable forex signals. Such accurate forex signals can be traded on a stand-alone basis, or used as a verification of your own trading decisions.
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