As with any type of trading, there will be golden rules to remember. Not doing so could cost you significantly, especially if you’re inexperienced. Forex trading is no different.
Because the forex market is uncertain and quite volatile, even the most experienced trader could take a massive loss at any time. That is why we have the following seven forex trading rules to remember so you can maximize your profits and minimize your losses.
Use a trusted and regulated platform
One of the biggest rules to remember is using compliant and regulated brokers and platforms. Not checking for compliance could cost you more than losing a trade. This list of Australian brokers contains top-rated and trusted brokers and platforms.
Guarantees are red flags
Continuing with trusted platforms, any broker that guarantees or promises you returns of any size is a huge red flag. The forex market is volatile, which means you cannot guarantee that you’ll always win. It just doesn’t happen. If someone had a guaranteed way to win, why would they share it? Use the best regulated forex brokers for trust platforms to help you succeed, but won’t guarantee it (because they can’t).
Have a trading plan
The most experienced and successful traders will likely tell you to develop a trading plan. This plan explains your goals, your risk level, what you have available for trading, and how committed you are to trading. Your plan will also include keeping a record of your trades and what your strategy will look like.
Practice on a demo account
For new traders, one of the biggest mistakes you could make is diving in headfirst. No matter how much research and preparation you do, it’s in your best interest to practice in a demo account first. That way, you can test your strategy to ensure it works and then fix any problems that arise. You’ll get the same experience with the real market, just without the risk of losing your money.
Keep your emotions in check
Emotional trading is like a one-way ticket to losing. When emotions take over, you lose your rational thinking, which means your strategy and planning go out the window. It is during this moment when traders have their biggest losses. Avoid trying to win back your losses if you’re having a rough day. Take a break, clear your head and come back thinking more clearly.
Keep records of your trades
It’s essential to keep track of all your trades, both wins and loses. Forgetting to do this will make it difficult to see if your strategy is working or if you need to make some changes.
Set your risk level
Another top tip you’ll find from experienced traders is to set your risk level. That point where a trade becomes too risky with what you have to lose and shut it down is your maximum risk level. Establishing this level can help prevent you from heading into a trade that could cost you basically everything you have.
Follow the above seven forex trading rules to help keep you on the path to success. There are many other rules out there that traders like to follow, but these are a good starting point for even the most beginner trader.