10 Rules For Successful Online Forex Trading

In the previous post I’ve mentioned online forex trading as a great way how to make money from home. I’d like to give you ten rules that you need to follow if you want to be a successful and profitable forex trader:

1- Trend Following

One of the most valuable trading strategies is trend following, which means that you identify a market that’s moving in one direction and follow that direction for as long as possible.
This is one of the easiest ways to trade as long as you always trade with a stop loss. Following the herd can be profitable but just don’t follow the herd off a cliff.

2- Don’t trade for the sake of trading

Forex trading is a game of strategy and patience. If you find yourself sitting in front of your computer every day looking at the forex markets but you don’t get a trade setup that you’re happy with, you may be tempted to just start trading for the sake of trading.
This can be a very costly mistake because you’ll enter markets at levels you normally wouldn’t. Don’t trade for the sake of trading, trade only when a setup occurs that matches your trading plan or strategy.

3- Not every hint is a good hint.

It’s good to listen to what other traders are talking about or what they are interested in but never blindly follow someone’s recommendation. Always do your own research and verify for yourself that what they are saying is in fact something of merit and that you could profit from.
Take responsibility for your own trades, don’t think that you can just blame someone else because they recommended a trade that lost you money.

4- Be A Contrarian

Sometimes it can really pay off to not follow the herd and take a contrary position against the markets. As I mentioned earlier, the herd has the direction right for a long time, but at some point in time, the herd always falls off the cliff. If you can identify when the herd is about to go off the cliff, you can position yourself in such a way that you profit from the herd going off the cliff.

5- Trade High-Liquidity Markets

It serves your best interests to trade markets with high liquidity (meaning many participants at all times) so that you can be assured of regular fluctuations and regular price executions. If you trade in markets with low liquidity you can experience irregular spikes or price movements that could hit your stop-loss and then continue in a direction that would have given you profit were you not stopped out.

6- Always Use A Stop-Loss

A stop-loss is an automatic order that limits the risk you have on a certain position. This allows you to determine the risk of every trade you make (I recommend risking no more than 5% of your account balance) and it will protect you from market fluctuations that are beyond your control (news items or global events like terrorism). Without a stop loss you’re very likely to go broke, sooner rather than later.

7- Emotions Are Enemies

As a trader you cannot make decisions based on emotions. You need to have fixed trading rules, a trading strategy and the discipline to stick to that strategy at all times.
If you allow fear or greed to be a deciding factor in the trades you make, you’re going to end up losing money if not end up being a losing trader overall.

8- Learn, Practice, and Trade

Nobody is born a profitable forex trader. It’s something that takes time and experience to become.
As a forex trader, make sure that you’ve read multiple books about the markets, technical analysis and the theory of trading. Always keep an open mind and be willing to learn from everybody who has sound advice.
You can only learn a certain amount from books, so you need to get practical experience trading the forex markets. You don’t even need to deposit real money for this, you can simply open a forex account with virtual money and learn how to trade before trading with your own money.
You can get valuable information on trading here.
If you need some practice in trading click here:

9- Have A Trading Plan

If you fail to plan, you plan to fail. This is especially true with the forex markets. You need to have a plan of exactly when you will trade, how often you will trade and where you take profits and losses.
Without a trading plan you’re unlikely to ever be a profitable forex trader. Trading without a plan is quite simply gambling, and gambling is based on luck, and when luck runs out… well, you know what happens.
Always have a trading plan and stick to it religiously.

10- Give Back

When you become a successful forex trader, give back to others in the way of helping them become better traders. It’s like karma, help others and you’ll have others help you.