Critical Forex Rules: 8 tips for successful trading from FXOpen experts

It is best that you implement them together consistently. FXOpen wishes you good luck in your trading!

“Use your head.” “Keep your losses to a minimum.” “Have a plan.” If you are looking for ways to create, improve or modify your trading strategy, you have most likely seen dozens, if not hundreds, of such invaluable bits of advice. Too abstract and obscure for those who have just begun threading these waters; too trite for more advanced players who are looking for expertise and guidance to hone their skills.

You may have also felt discouraged after learning that the majority of new traders will fail, get disappointed and eventually choose safer and less risk-prone hobbies. Here is where our article comes in handy. We at FXOpen know very well that success is a difficult feat to achieve in trading. Having said that, at the same time, we know that it is possible. Profitable traders gain rare useful characteristics and become proud members of our professional minority.

So, if you are looking to find answers to concrete and more hands-on questions like: “How do I choose the strategy that’s right for me?” “How do I book reliable profits and what do I do with them?” “Is there a way to keep out of the risk zone?” this article is perfect for you.

Below, you will find the eight simple but insightful and informative trading rules compiled by FXOpen specialists. We made sure to lean back on our own vast experience in the field of trading and then present it in a way that does not resemble a generalized adage. Once you finish reading our article, you will a) feel much more confident about your trading skills — and b) get answers to at least some of the questions that have been plaguing you, trading and investment-wise.

So, here is how you become a successful trader.

1. Always use a stop loss (unless the risks are regulated by position size).
As a trader, you must understand that it is impossible to exit all your trades with a profit. So a stop loss serves as a protective shield that limits your risks and losses. Make it a habit to use a stop-loss, and you’ll be stressing out way less than before.

2. Never trade when you are agitated.
An interesting point to make on the backdrop that the entire idea of technical analysis revolves around emotional reactions. However, by learning to keep your emotions at bay, you’ll learn how to beat others. Pave your way with facts, not emotions or hope. Like they say: Nothing personal, just business. So be business-like.

3. Withdraw profits from your trading account regularly
Even if you are a smaller-scale trader, we recommend withdrawing some percentage (5% to 10% sounds reasonable, though it’s up to you, of course) of, say, each quarter’s profits, and investing them somewhere (see #8). This way, you will feel less stressed!

4. Never average down losing positions.
For instance, should you open a 10 lot short position and the market goes against you by 20%, you may choose to enter another 10 lot short position at a lower price, thus increasing your exposure. Trust us, no seasoned trader would do this: averaging the positions down is a bad idea that brings along negative consequences. That is why we strongly recommend avoiding this risk.

5. Stick to your trading strategy and never deviate from it.
The best approach to trading is a systematic one. This way, you’ll be able to be in charge of risks, define your goals, and select the trading methods that best suit your needs. So do have a trading plan, and stick to it. Making “accidental” gains and successful trades outside of that framework is considered to be poor strategizing.

6. Invest only the amount that you are ready to lose.
This will allow you to keep calm and make the right, informed trading decisions. Make sure that the funds on your trading account are expendable, and if not — keep saving until they are. Don’t think of that money as essential capital, like mortgage payment, in other words, the capital that should never be risked.

7. Never ignore the risks in order to potentially earn more.
Ignoring the risks is a risk, too. Trading is essentially a business, so think of yourself as a business owner. This way, it is easier to ask yourself: Would I do this this-and-this and put my business in danger for this mere possibility of a profit that is hardly visible somewhere on the horizon? No, you wouldn’t.

Also, keep in mind that, as a rule, red flags and large losses are often prefaced by technical warnings. So don’t become that trader who chooses to ignore them and keep an eye for early worrying signs!

8. Create additional revenue streams by investing your trading profits.
One: all trading operations involve risks. Any smart trader always has a contingency plan. And two: it’s best to be prepared in case that rainy day does come and have a financial cushion to rely on. Why not add some diversity to your investment portfolio, so to speak, by using the funds you obtained thanks to trading? We recommend learning more about passive income and investment.

The bottom line
Can you already feel that your trading skills have been boosted thanks to this knowledge? Here are our parting words: you can never be 100% sure about the price’s next move. Noone can be. And yet, the above eight points will help you observe and determine the best moment for your move. Each of them is pretty significant on its own. However, it is best that you implement them together consistently. FXOpen wishes you good luck in your trading!

Read this next

Retail FX

Japanese FX broker Rakuten Securities expands stocks offering

Japanese FX broker Rakuten Securities Inc ‎said that it plans to add a total of 54 stocks to expand its offering of tradeable instruments.

Interviews

FIA EXPO 2022: Interview with Trading Technologies

The derivatives trading industry has gathered in Chicago to attend the FIA EXPO 2022 on 14-15 November. 

Market News

What’s moving markets for the week ahead 

The US labor market and the OPEC+ meeting are the most important variables for next week.

Digital Assets

Payments innovator BVNK acquires SPS Ltd to become UK EMI licensed operator

“We believe that regulated, fiat-backed stablecoins combined with the best parts of traditional payments will provide the infrastructure needed to deliver this vision. We will continue to obtain new licences and build out our capabilities to provide our customers with an unparalleled offering.”

Technology

Innovations in Technology and the User Experience — A MarksMan Update

MarksMan Liquidity Hub, the go-to platform for crypto spot liquidity solutions, has just unveiled an exciting update with new UI/UX features.

Technology

Alveo adds Sentiment indicators, Tax, and Regulatory Risk data from SIX

“Market participants increasingly need on-demand access to our vast catalogue of global financial and investor protection related data.”

Technology

B2C2 taps KX to enhance analytics for institutional crypto

“KX technology is proven in enhancing a broad range of mission-critical data and trading systems across front, middle and back-office operations for the majority of the world’s leading tier-one banks, brokerages, and investment firms.”

Executive Moves

ADVFN appoints Amit Tauman as CEO

ADVFN operates global financial information websites for retail investors.

Institutional FX

HKEX launches Hang Seng TECH Index Futures Options, adds after-hours session

“The launch of the Hang Seng TECH Index Futures Options and enhancements to the broader suite of Hang Seng TECH Index derivatives today will provide global investors even more choice and flexibility, helping them to successfully manage their portfolios and risks.”

<