11 Rules of Successful Forex Trading

When your trading is successful you feel great. But your life can turn into nightmare when you face the period of losses. You can spend weeks gaining money and lost everything within several minutes. This situation is well known to all traders. Hence everyone should realize the possibility of such situations and be able to change the strategy in time. Rational observations and logic thinking help us find answers to all questions. This article covers only one question: “What is the difference between successful and non-successful traders?”

The following observations are based on many traders’ experience and they may become your guidelines in the process of forex trading.

Observation 1

The most of non-successful traders are those who stick to intraday or short-term strategies. This can be explained by the fact that such traders lack proper background and the elaborate strategy. This kind of trading does not excuse even slight mistakes, and besides such traders do not often possess enough capital. Successful traders are mostly those who choose middle- and long-term time periods.

Conclusion: according to the statistics middle- and short-term trading provide more opportunities for traders to achieve success, and note your capital capacities – the more you deposit the more chances you have to “survive”.

Observation 2

Non-successful traders often use complicated systems and methodologies. Successful traders on the contrary use simple techniques. They all use either modified versions of existing techniques or the systems invented by them.

Conclusion: it is logically proved that simpler techniques are usually more practical. The essential fact is not the nature of a technique but the understanding whether it is useful or not. Hence we may conclude that the most important part in trading plays your own way of thinking and analysis.

Observation 3

Non-successful traders usually rely on computer systems and indicators. They do not devote time to study the mathematic base of these systems and consider only the “pop” way of using them. Successful traders realize advantages of using computer, such as the possibility of prompt analysis of huge data amount and many markets. But at the same time they clearly understand market mechanisms in all the details.

Conclusion: if you want to be a successful trader it is vital to understand functioning principles of all the mechanisms involved.

Observation 4

Non-successful traders spend lots of time forecasting where the market will be tomorrow. Successful traders spend more time thinking over their reaction to the current market movement and planning their strategy correspondingly.

Conclusion: a trader will have success if he can forecast the crowd reaction for this or that event. Hence we may conclude that it is easier to be a successful trader than a successful analyst as analysts should forecast market movement and make recommendations as for how to gain maximum profits. If you ask a successful trader where the market will be tomorrow he will probably shrug his shoulders and reply that he would follow the market in any direction. Such an answer proves that the trader monitors market movement.

Observation 5

Non-successful traders concern only on profitable transactions and successful traders pay attention at no-win transactions, profits as well as risk and profit correlation.

Conclusion: according to our observation it is much more important to pay attention at risk but not at gains or losses. A successful trader considers how much money he can gain and how much can loose and does not pay attention at hypothetic maximums and minimums associating with “right” and “wrong”.

Observation 6

Non-successful traders are often unable to control their emotions. Successful traders overwhelm their emotions and only then begin analyzing market situation. If the situation is unchanged emotions are disregarded, otherwise emotion is admitted to be right and the position is closed.

Conclusion: if a trader opens and closes positions only relying on his emotions his market approach can be considered neither practical nor rational. It may sound strange but those traders who fully disregard their emotions are not right either. The best way is to accept all emotions and then analyze the reasons why this or that decision was made.

Observation 7

Non-successful traders are extremely anxious to be right. They like the feeling of euphoria when adrenalin comes to blood. They like monitoring market 24 hours a day. Successful traders acknowledge emotions but do not let them prevail. It is not a must for them to constantly watch quotes. They do not strive to be always right. They pay attention only at what may bring money and what may not.

Conclusion: it is important to stay synchronous to market however it is also important that trading does not mingle with your private life. “Over trading” leads to psychological and physical degradation. Successful traders try to quickly react on the situation but trading for them is a job, not a destructive weakness.

Observation 8

When a non-successful trader loses, he buys a new book or system and starts trading according to it. A successful trader analyzes what happened and make corresponding corrections in his methodology considering the new received data. He does not switch at once to a new system making this only after the realization that the former system was not appropriate.

Conclusion: the most successful traders stick firmly to their strategies. They often use one or two techniques that proved to be profitable. It is better to use one poor strategy than jump from one to another.

Observation 9

Non-successful traders choose as examples prominent traders who made big money and try to imitate their techniques. Successful traders study new strategies; however they use them only in case when they correspond to their own approach.

Conclusion: one more time we see that trader’s individual features, his knowledge and system are much more important than achievements of market gurus.

Observation 10

Non-successful traders often omit many factors influencing the possibility of gaining profits. Successful traders realize that profits depend on “cash flow”. Market should receive more and give less. Everything influencing this process should be considered.

Conclusion: all factors influencing profits should be taken into account.

Observation 11

Non-successful traders perceive everything too seriously and do not have a sense of humor. Successful traders on the contrary are the most joyful people with the most reach imagination in the world. They do their work seriously but they are always ready to laugh at themselves.

Conclusion: it is well known that mental specialists determine whether a person has the sense of humor or not. The more serious is a person the higher probability that this person is ill.

Both successful and non-successful traders think of a trading as of a game. The only difference is that for the former it is not just leisure but a calling to which he is fully devoted.

Author's Bio: 

I have good experience in trading Forex and CFDs. Besides I have a good understanding of FX industry having studied many leading Forex brokers and tried their services. I support a number of blogs and write articles for corporate website and other web-resources.