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10 Golden Rules of Forex Trading

The forex market is one of the biggest markets in the world, with its trading volume in excess of $5 trillion. It is not surprising to know that people all over the world want to invest in this market to enjoy substantial returns. While the market’s volatility can certainly be profitable, it should also be noted that forex markets can be uncertain and volatile at the best of times and inexperienced traders can end up chasing their losses. If you want to boost your chances of landing on the winning side, these are the 10 golden rules of forex trading that you need to follow:

Rule 1: Avoid software that guarantees returns

Lots of people prefer to use forex trading software for automated trading as they don’t have a lot of knowledge about the market. During your search, you shouldn’t let yourself get trapped with promises of guaranteed returns. There is no forex trading software in the market that can guarantee winning trades. If it did exist, would anyone sell it?

Rule 2: Always start with a demo account

Practice makes perfect and this definitely applies to the forex market. With a demo trading account, you can make enhance your trading skills by making virtual trades in real markets. Once you get the hang of it, you can switch to a live account. Plus, a demo account is best when you want to test new strategies. But, it should be noted that a demo account cannot give the same results as that of a live account.

Rule 3: Get some solid forex education

Everyone knows that knowledge is power. Choose a good broker like ETFinance that gives you access towebinars, tutorials, economic calendar, expert financial commentary and analysis, charts and graphs and forex trading signals. Your trading performance can be enhanced with the use of all these tools. The ultimate goal of a forex trader is to generate more profits than losses over time, even if your winning trades are less than losing trades.

Rule 4: Avoid emotional trading

It is essential to remember that the risk of loss is constantly present whenever real money changes hands. Therefore, you should always make your trades based on carefully calculated strategies and tactics. In order to ensure that your emotions don’t get the better of you, it is best to remain focused on fundamental and technical factors and market news throughout the trading process. Check out best forex signals

Rule 5: Follow successful traders to learn forex trading

While there is no forex trading system that can possibly guarantee you success, there are some that can be used as reliable guides. It is possible for traders to learn from the experience of success forex traders and strategists. Doing so can increase the likelihood of your success. However, it is essential to bear in mind that when you are judging the results of an expert or professional trader, their past performance is not a reliable indicator of any future results.

Rule 6: Manage your capital wisely

Since high volatility is the primary characteristic of currency markets, the forex market can change within seconds. You need to manage your profits when you generate winning trades. Use close out positons, limit and stop-loss orders and hedge your exposure as much as possible. Make sure you are in control of your capital at all times.

Rule 7: Manage your investments in every trade

One of the most crucial elements of forex trading is to never invest more than 2% of your capital on a single trade. If you do so, you will expose yourself to risk of huge losses. But, when the same capital is spread over several trades, your overall losses can be reduced.

Rule 8: Use risk protection strategies

Risk protection can be different for every trader, but you need to manage your capital wisely. This means limiting the amount per trade, using forex trading signals, hedging the trade and trading with great knowledge. Stop-loss orders can be immensely useful.

Rule 9: Use common sense

If you are trading a strong currency a weak one, the former will dominate. Always use your common sense to determine the effects of upcoming and current events on the currencies you trade.

Rule 10: Be cautious about leverage

If you check ETFinance review or reviews of other brokers, you will discover that they offer leverage to traders for forex trading. This gives traders the opportunity of increasing the size of their trades without requiring a lot of capital. You can magnify your profits, but it should also be understood that losses can also be magnified with leverage. Make sure you keep your leverage use limited so you will not have to face serious financial trouble.

When you use these 10 golden rules, you will be able to reach a much better position in the long-term.

Chris Morgan

Hi, I'm Chris Morgan. I'm very passionate about my work. Even I'm very fond of blogging as it enhances my knowledge about the various aspect of the internet. https://futurewithtech.com/