Before we go into 7 rules of Forex Trading, that have been approved
by a number of full time and successful traders, I'd like to narrate
this story.
There was a lion, a donkey and a fox all keen to go out rabbit
hunting together. After a productive day of hunting, the three of them
sit around the pile of rabbits and the lion asks the Donkey, "Mr Donkey,
would you please divide the pile into equal shares for the 3 of us?".
The Donkey obliges and counts the rabbits into three equal piles for
each of them. The Lion immediately roared and pounced him. He then piled
all the rabbits on top of the donkey and asked the Fox "Mr Fox, would
you please divide the rabbits up evenly between us?". The Fox takes out 1
scrawny rabbit from the pile and puts it in a pile for himself then say
"There you go, Mr Lion, that's your pile" pointing to the large pile of
rabbits. The lion says "Mr Fox, where did you learn to divide so
equally?" and the fox says "The Donkey taught me."
by Sorna Devadas
The moral of the story is to learn from others' mistakes. Now we
proceed to our 7 rules. These are for you benefit as mentioned earlier,
from experienced, successful traders.
Rule #1 Never risk any more than you can afford to lose, you
will lose money, all traders do, make sure you're not sacrificing
anything else important in the process
Rule #2 Never risk any more than 2% of your margin trading
account on a simple trade. For mini account holders, 2% of $300 would be
$6 so realistically you would need around $15 so you can make this 5%.
As soon as your account size is big enough, make this 2%.
Rule #3 Always use a stop loss order. If you haven't figured out
where your stop loss order and limit order should be at the start of
your trade then you shouldn't be trading.
Rule #4 Know your exit point before you enter a trade.
Rule #5 Demo Trade First: Become successful with paper trading when there's nothing on the line before you open a real account.
Rule #6 Take a breather when your equity has taken a dive.
Rule #7 Don't let your emotions call the shots: Stay cool, calm and collected. Patience and a clear head will win the game.
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