These five rules define the most successful foreign-exchange currency traders. A number of these rules are relevant to any market, but some are particular to trading currency. Learn these key habits with discipline and patience, and you may obtain some of the key attributes to building your wealth by trading currency.
Trade with a Plan
You must have a well-conceived plan for each trade that you make. Nobody experiences long term success by simply “winging it”. FX trading is simply too risky for that, so don’t even try.
Re your take profits, stay flexible and be prepared to settle for less if that is all that you can take out of the market at that moment. Similarly, if market developments are shifting approvingly for you, extend your profit targets.
Forecast Event Outcomes
The best traders think ahead a few moves, like a successful chess player. Look forward to future events and give consideration to the way in which the market has priced an expected outcome. Think about if the event matches those expectations or not, and the likely reactions of that.
Develop trading strategies based mostly on the choice outcomes and be in a position to trade to them. Then you’re before the remainder of the market who are still making an attempt to work out what happened and redraw their trend lines.
Avoid getting emotionally attached to positions. It’s actually about earning profits, not being wrong or right. Be well placed to adapt to inward bound reports and change your position if changing events dictate it. Don’t wait for price action to take you out of your trade.
The best traders are respondent to new opportunities, and react in an appropriate way. Keep enough margin available for additional positions.
Be Prepared for Trading
The FX markets are open 24 hours per day and can behave in a random fashion depending on events going down anywhere in the world. That’s why we’re keen on it right! Be prepared by knowing about upcoming information releases, prepared speakers, setting of central bank interest rates, major meetings of financial leaders (eg: G7), liquidity conditions, and use rate alerts to assess opportunities when unpredictable events occur.
Keep Technically Alert
Even if your plan is not technically-based, still be aware of important technical levels in the currency pairs you are trading. Know the key Fibonacci retracement levels as an example. Keep acquainted with technical levels as a part of your general trading system, and be sure to check your forex robot reports regularly.