If you trade the currency market, it is important to understand that there are as many different trading styles as there are traders. Because each person has their own style of trading. In forex trading, there are many different methods to make a profit. This means there is no single strategy that applies to all, but yet there are some principles that you can apply to your strategy, no matter what it looks like, and that are suitable for other traders.
In this article, we count you in on another golden rules in trading, to which all should hold. When we come to speak about the risk then we can add that some traders advocate the theory that the percentage of the balance that you risk on a position with the scope of increasing capital closely is linked: gradually one could , if the merit increases , put more money on each item.
This procedure depends on the actual traders, but it is a course of action that you should think twice before putting it into practice . Therefore we advise you to keep the same dimensions for your positions and on the contrary even to reduce the risk portion with a gradual increase in the balance.
The golden trading rules
Follow the trend
Most of the forex trading strategies and systems concentrates on the identification of trends, so there’s no reason not to follow these in order to make money. If the trend is rising or falling , you either have a long – or open a short position, and not act against this trend. Contrary to frequent assumptions you usually lose more money if you decide to go against the trend than you can earn it.
Protect your cash balance
Too much to money put in one position has many new traders on the Forex market for the first time led to failure. One should never put too much money on just one item, even if it still is a strong positions to your opinion or even if your indicators give you the best signals. Because everyone can be wrong! Therefore, it is important to know how much you can risk. There is no clear answer to this question, since the risk depends on which trading strategy you have chosen. Some say that you can if you want to achieve something and focuses heavily on the actions of risk up to 5% of the balance in his account to a position. Our opinion is that a well-calculated risk stops at 2%, the position is safer and easier to handle.
Set goals for each position
To have a precise profit target for each transaction knowing exactly when to get out of the position is an important principle. This will help you define each position optimally. You can not be too greedy and keep it open for too long a position. On the other hand, if an item runs wrong once, do not try to persevere in the hope that reverses the trend . Rather, one should then limit the losses and exit the market. To use stop – loss orders should be a mandatory principle for all investors.
You should never rely solely on perception
Why not? Because you will probably usually not be objective. It should be the data that substantiate your positions and not your feelings. The best way this rule into action is the following of signals. There are many providers of Forex signals, which allow you to forecast the currency market to access – in this case of course you have to choose a provider offering a free demo trading account, like Easy-Forex, to exercise.
These are the four golden rules of currency trading , advice that can help you to increase your cash balance.