To be a successful trader, there are rules that you need to pay attention to. Failing to abide by the rules will lead to a failure that may result in a complete loss.

You might have often heard and seen or even given advice directly from your senior traders about how to trade and the rules you have to follow. This time, I want to summarize some suggestions I've ever heard, read, and accepted about how to do good trading. Let's check it out one by one.

Rule for beginner traders

RULE 1. Never take risks you can't afford.

This rule is related to many things, such as how big your deposit should be, and how far the stop loss you should put. In the beginning, when I was still learning about trading, my mentor advised me to only deposit the amount I was willing to lose.

Use only excess funds in your pocket, not the money you need to fulfill your daily needs. For college students: don't use your tuition fee to trade forex. It would put extra pressure on you not to lose them, not to mention the kind of disaster it would bring if you actually lose them.

 

RULE 2. It would be better if you don't use more than a 2% margin in one transaction.

Honestly, I often break the rule in the beginning. Some trader friends even told me to use up to 20% margin in one position. However, I feel better to divide the 20% margin into several positions rather than use it in one position.



RULE 3. Always use a stop loss.

Don't be a follower of stop loss=margin call. It is better if we realize sooner that we are in a wrong position than stay floating for a long time. My mentor used to say that floating is a part of trading, but still, it means you can't use the funds you could have been used to open more profitable positions. Plus, it opens you to the risk of bigger loss.

 

RULE 4. Set a profit targets when you come into the market.

Don't ever think 'let's see later' in trading. Every open position has to be followed by stop loss and profit /point target.

 

RULE 5. Don't be ashamed to use a demo account.

It will give you the chance to establish your trading strategy. One of my mentors once asked me to use a demo account only for a year! Gee, can you imagine how 'sorry' I am to see rows and rows of green pips that I successfully I collected on my demo account!?

 

RULE 6. Just take a break and take a deep breath when the market moves beyond your expectations.

Don't hesitate to try to take back your loss, but don't ever think of taking revenge. Trust me, trading with the intention of revenge will make your loss get worse. It will be better to close your trading platform, leave your desk, and do other interesting stuff. The world won't end just because some positions are exposed to SL (Stop Loss) or got an MC (Margin Call). So, don't worry, the point is that we can take a lesson or two from the incident, okay!?


RULE 7. Don't let your emotion control your decision in trading.

Forex trading and emotion are just like electricity and water. It can be a deadly danger if mixed together. So keep away your emotions when you open your trading platform.

 

You may often hear about the seven rules above, but I wanted to remind you again so you can take a lesson from another trader's experience. Be aware that in forex trading, you need experience; not necessarily your own, but anybody else as well.

OK Guys, keep the spirit alive, and happy trading!