While we have previously talked about some of the trading mistakes that forex traders should stop making in 2018, we now want to go into some more depth about the biggest Do’s & Don’ts in the Forex market. Bear in mind the six points below to help keep you on the right track with your trading!
- Follow a trading plan. We have added this as the first item on the list for good reason. You absolutely need to have a solid plan that details every aspect of your trading before you venture into the Forex market. Remember that without a plan, you are not trading, you are gambling. Don’t be a gambler – have a plan!
- Have a checklist. A checklist is number two on the list (it is almost as important as a trading plan!). On your checklist, include the trading rules that must be satisfied before you enter into a trade.
This could be things like “trade is in the same direction as the overall market trend” or “reward:risk ratio is at least 3:1.”
Reading through a checklist before each new trade greatly reduces your chances of making silly beginner mistakes.
- Follow a strict routine. The importance of a daily trading routineis something we have talked about before, and for good reason. Trading can become a lonely endeavor, and some may struggle with a completely new situation where they have no boss to tell them what to do at all times.
Having a routine in place will help you overcome these challenges and put you on track for a successful career as an independent trader.
- Become emotional. Becoming either angry when you lose or overly happy each time you make money is not a recipe for success as a forex trader. It is a fact that the best traders among us are those who are able to detach their emotions completely from their trading.It is when you become emotional that you make the worst mistakes in trading, such as trying to make up for a loss, becoming overly aggressive after a win, and so on. In short, this only leads to bad outcomes for forex traders. Don’t get carried away!
- Marry a trade. Sometimes in trading, you become so convinced that a certain trading instrument will move either up or down that you completely ignore arguments and even evidence of the contrary.
For example, don’t buy Apple shares purely out of your love for iPhones. You may love your phone, but as traders we need to look at trading opportunities objectively in order to succeed.
- Listen to rumors. In trading, it’s essential that you remember to always do your own research. Perhaps you have a friend who’s really good at trading and has made lots of money, but your situation will still always be slightly different: You don’t follow the same trading strategy and methodology, you don’t have the same position size, and you may not know the target price or stop-loss that he is using.
Therefore, all serious traders do their own research before every single trade they enter into!