The 5 Golden Rules on How To Make Money On The Forex Market

1. Keep Cool

Successful traders do not let their trading depend on their emotions or their emotions depend on their trading. They do not risk more because they are feeling lucky, they do not hesitate when the signs are right, or pull out of a trade too soon out of fear. Equally, they are unlikely to celebrate a gain, nor will they sulk, shout or kick the dog when they lose.

A person who is ruled by their emotions will not make it as a forex market trader. Self discipline can be learned but make sure that you have fully mastered your emotions on a demo account before you think of going live. If you are still taking unplanned risks you are not ready for real trading.

2. Think For Yourself

Different traders have different techniques. This means it there is limited value in getting advice from anybody else. In fact, unless you know that the person follows your system and techniques, their advice is probably worthless to you.

Do not copy somebody else's system just because they seem to be making money with it. Do your own research and check everything that you are told. Even then, consider carefully before abandoning the system that you have chosen before. There may be factors that you have not taken into account. Something that works for somebody else will not necessarily work for you.

3. Keep Records

Keep a spreadsheet detailing every trade so that you can see patterns in your own results. You do not necessarily need to use it to change anything, but refer to it often to remind yourself of the many small trades that add up to success or failure.

What should you record? At a minimum, the currency pair, your position and the opening and closing prices. However, these bare facts will be much more informative if you can also add why you took the position. Did it fit the criteria of your system? What made you think that the trend would go your way? When you look back you will have a much better view of why your trading history is going well or not so well.

4. If In Doubt, Don't

Do not open a trade if you are hesitant or unsure about it, provided of course that you have a reason other than fear for your hesitation. A trade can only go one way or the other, so if it is not completely right, it is wrong. Wait. There will be plenty of better opportunities.

5. Limit Your Trades

Do not be drawn into thinking that you must never miss an opportunity. You do not have to be on top of a lot of different currency pairs and jump into every market regardless of what else you may be doing.

Limit the number of open trades that you have. It is not a good idea to have more than two open positions at the same time, and unless your first trade in the forex market is profitable you should not even consider opening a second.