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Forex Trading: Important Rules

 

In this section we will be putting forward the few important rules that should never be broken when trading. If you can apply all these rules in a consistent manner and with the proper amount of discipline, you’ll be well on the way to becoming a profitable trader.  
 
Below are some rules which can considerably advance your chances of success if they are understood, practiced, and implemented properly and in a consistent manner in your trading. These rules have really been learned through experience, trial-and-error, and inevitable mistakes that everyone makes when they begin in the trading business.

Setting up and Implementing specific FOREX objectives and goals
 

Nothing is more important to the success of your trading than setting some specific goals and objectives for what you try to achieve. A lot of people find it amazing how often they hit our targets in the best way when they speak aloud and write them down.

For the success of any business it is important to have some measurable objectives that you are actually able to achieve. When you trade, the first objective is to make money of course, but you should also have some other non cash-related objectives for your business to thrive.

You must never forget that risk and reward go hand-in-hand in trading and that we cannot expect to achieve high returns without planning for high risk draw-downs.

Your goals and objectives must be very precise to you, but they must also comprise the following elements if you want them to be useful:
• Be measurable in compliance to completion and the timeframe which are involved
• Be realistic in the goals that you wish to achieve
• Make your endeavours worth the time and effort involved
• Always be positive

As a case in point, here are some real objectives - partial list:
• Try to come up with 2 new positive-expectancy trading systems every year.
• Every year, try to make fewer errors when implementing your trading systems.
• Work to attain a return to a maximum draw-down ratio of 1.5:1
• Every year, try to take 2 weeks vacation from trading.

You should also bear in mind that only one of them should be about making money, and that has a measurable objective that is quite similar to a draw-down, and is not guaranteed. If you know what you want from your trading, and when you are trying to achieve it, all your efforts will be more focused on achieving your goal.

This will also help to guide you to only take notice of things you really want to achieve with your available time and resources. This can also be a way for you to effectively measure the success and progress of your trading strategy.

Generally, a trader who has an objective which is well-defined, will be a lot more successful than a trader that doesn’t have a pre-defined goal.

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