Three legendary rules to beat the Forex market
The key reasons for losing money is lack of discipline. If you do some research you will find serious lack of discipline among the rookie traders of this market. Knowingly or unknowingly they are taking a huge risk in each trade and breaking the most basic rules of the investment industry. All the successful traders are more concern about their investment rather than making a profit by using the market volatility. You need to stay in this game to earn money. If you blow your account by losing a few trades, there is no way you can become a successful trader. Now let’s dig into the details of this market. We all know discipline is the key to success but what about the rules. You need to pick the correct rules at the correct time to become a successful trader. Today we will discuss three important rules which will help you to become a profitable trader.
A modified version of the 2% rule
Everyone knows about the famous 2% rule of money management. No matter what you have in your chart you can’t risk more than 2% in each trade. But even after following this strategy people are still losing money on regular basis. You will tweak this simple rule and help you to become a successful trader. If you execute more than 5 trades in a day, risking 2% in each trade is extremely risky.
In fact, you will be risking 10% of your account balance. And if you lose all trade, you will be down by 10%. This is where we need to bring change. We can’t have more than two open trades at the time same time. Most importantly you should never risk more than 2% in a single day. Just by changing a small segment of the rules, you will be able to become a profitable trader much more easily.
Learn to read the chart
Finding the perfect trades while trading CFDs is very hard. The beginners don’t know the proper way to do the chart analysis. Though there are different kinds of charts you need to follow the candlestick chart pattern. Candlestick chart pattern trading strategy is one of the easiest ways to spot the potential trading zone in the market. If you can interpret the sentiments of the candlestick you can easily find very good trade setups.
Trading the market by using the Japanese candlestick pattern is referred to price action trading. Price action trading strategy is one of the easiest ways to predict the future price movement. Being a new trader you should not use the price action confirmation signal in your real account. First of all, try to trade this market in demo account and develop the proper method. Once you feel comfortable with your strategy it’s time to switch back to the real account.
Learning is a continuous process
The new traders might think you will not have to learn new things after working hard for the first two years. But this is not all true. This market is dynamic in nature and every single second it’s changing its pattern. For this very reason, the expert traders are always reading books and articles. Most importantly they always listen to the major news announcement since these are the major price driving catalyst of the market. As a novice trader, you need to develop a strong reading habit to change the structure of this industry.
The more you will learn the better you will become at currency trading. There is no need to take a huge risk and earn big amount of money from a single trade. Focus on the market trend and use the key support and resistance level for trading. Always believe in your trading strategy and never break your rules. Invest money to get the proper education and never stop learning new things about this market.