Forex Trading Rules to Live By for Profitable Currency Trading

When trading the forex there are a few very important rules that you should never break. By sticking to these rules on a consistent basis, your chances of success as a profitable forex trader will greatly increase.

A big mistake most unsuccessful traders make, whether they are forex trading, trading stocks, or any other market, is that they let emotion get in the way, they break their own rules, and they lose big. Don't let this happen to you.

For your forex trading to be successful you need to set specific goals and objectives regarding your forex trades.

Like almost anything else you want in life, you'll greatly increase your chances of being a successful forex trader by developing and writing down specific goals that you want to reach. Your goals need to be specific, measurable and realistically achievable.

This doesn't mean you shouldn't aim big, but if you are starting with $10,000 in your forex account, you should not have a goal of being a millionaire by the end of the week. You're just setting yourself up for frustration and failure.

Your forex trading goals could be things like:

Achieve a maximum draw-down ratio of 1.6:1

Develop one new positive-expectancy forex trading system every six months

Consistency And Discipline in Forex Trading

If you are going to be a successful forex trader, you need to be consistent and disciplined when it comes to implementing your forex trading system. This is where many forex traders lose their way. They let their emotions get the best of them and break the rules of their trading system. This causes more (and larger) losses than usual and may drive you away from trading permanently.

It takes a lot of discipline to stick to your trading system. But it's necessary for long term success.

Let me give you an example that hurts many traders on the upside. They follow profitable trades after they have already closed out their position. While you need to let profitable trades run, it's also important to have ever higher stop losses in order to protect yourself.

For example, in your forex trading system your stop loss may be 5% behind the current price. If your trade drops 5%, you trigger the stop loss and get out. Here's where the problem can occur. It then rebounds and scoots much higher.

So instead of being happy that your system worked and you profited 20 or 30%, you are unhappy because you missed out on another 20% after your stop loss was triggered. So next time, you ignore the stop loss.

Unfortunately, it keeps going lower and lower and you keep holding, waiting for a rebound that never occurs and you've suddenly lost half your training account.

Discipline is a huge component of successful forex trading. Forget it at your own peril.