Golden Rules For Trading Forex
In the forex faq today, we have a question from one of our fellow traders asking me for the golden rules for trading forex everyday.
Below is the question
Thank You very much about the generous attempt: Here is the Question: Everything seems to be inevitable and How can we get rid of the ‘analysis paralysis’ while taking the trade. Pl. specify’the golden rules’ that can be followed every day.
Best Wishes and Thank you again.
I believe that there are quite a number of you here in this blog suffering from the problem of analysis paralysis. Franking speaking, this problem only occur to those of you who do not have a working strategy on hand.
Without a working strategy on hand, you will not have the confidence to enter a trade and tend to continuously trying to analysis the market to look for a decent entry. If you have a reliable strategy on hand, you will enter a trade once the setup is according to your trading plan.
Therefore if you were to ask me to suggest a way to help you get rid of your analysis paralysis problem, it is to get yourself a working and reliable strategy that has been proven to work.
As for your second question on the golden rules to trading. I must say that what I am sharing you below is purely based on my own opinion.
My Golden Rule Number 1: Only enter a trade that is 100% according to my trading plan.
My Golden Rule Number 2: Always allow the profit to run to my target
My Golden Rule Number 3: Always shift the stop loss to breakeven when it is certain pips in my favour.
Let me elaborate more on the above 3 rules. For rule number 1, it is very important for us as a trader to have the discipline to stick to our trading plan. There are times where you may be tempted to enter a trade that is not according to your trading plan but you must overcome this problem if you want to really make money in trading.
The only way you can make money in trading is to stick to a reliable strategy that produces more profitable traders than losing trades and has a high risk reward ratio.
As for rule number 2, a lot of trader tends to cut short their profit fearing that the market might just reverse and take back all the profit. However if you do not allow your profit to run to its maximum target, how can your strategy produce good risk reward ratio.
As for rule number 3, capital protection is what a professional trader is interested in. New traders tend to be interested in making profit but experience traders tend to be interested in protecting their capital to trade another day.
Therefore you must have the habit to protect your capital when the price has moved certain pips in your favour.
I hope that I have answered your question and do feel free to ask me more question via the comment section below.