10 golden rules for currency investors

Posted by GRY on October 30, 2018

Foreign exchange markets are changing, and there are no fixed shortcuts that make investors always profit from trading. Investors must repeatedly deal with proven foreign exchange trading strategies in order to generate a full profit in a series of transactions.

1. Success depends on a person’s trading discipline

Much of a trader’s success depends on one’s trading discipline.

Seventy percent of currency traders lose money, with 15 percent remaining. The remaining 15 percent of currency traders gain because they have consistent discipline that leads to profitable trades.

The formula is simple: a disciplined trade, you may succeed; No deal without discipline, you’re bound to fail. Many naive investors want to double their profits in days or even weeks. But they don’t realize that foreign exchange trading is like any ordinary investment, not a plan for quick profits.

2. Have a reasonable capital account

Most investors test trading strategies by starting with a simulated account. Once investors are confident in their earnings strategy, they turn to real accounts. Some people may try to trade with a small amount of real money to further test their strategies and emotions, and it’s ok.

But why is it important to emphasize well-funded accounts? If investors with $100 in capital account and $5000 in capital account.


Let’s say we manage to get a 5% return in a month:
$100 to give investors $5.
$5,000 to investors for $250.
If you compare the two, $100 account holders will tend to trade more aggressively because the returns are less than satisfactory. As a result, small account holders are likely to be under pressure to take on more transactions. This behavior leads to more risk-taking and ultimately higher odds of loss. As a result, $100 account holders are more likely to burn their own accounts.
However, the person making $250 can sense how the trade is starting to improve their lifestyle without having to overtrade or take excessive risks.

3. Each transaction does not risk more than 5% of capital

Proper risk management means trading within an investor’s account size, and the general rule of thumb is that risk does not exceed 5 percent of an investor’s capital. Since we don’t have 100% market control, we can’t win 100% of all transactions.

Our goal is to get a net profit in our account. If investors do not limit risk or keep the size of the deal consistent, then investors could lose all of their gains in the past month in a single trade, or worse, they may need to raise the margin on a single transaction for themselves that is overly leveraged. While many trading strategies require different risk management, a long - term trader can trade a smaller number of hands. So, it all depends on your trading style.

4. Don’t try to enter every market round

Don’t try to grab the top and bottom! Investors may need to set up reverse trend trades near the top and bottom of major markets. In order to get past any possible profit, many investors will want to enter into every transaction. Trying to capture the top and bottom of the market is like trying to stop a bull or bear market and hoping it will reverse, too risky!

5. The trader’s job is execution, not prediction


Investors should never try to predict where the market will go as traders should wait for signals or hints from the market that suggest the next possible step. Investors’ job is to take advantage of these moments to ride the wave together.

6. Always stick to your trading plan

If an investor wants to sell or buy a particular currency because he or she sees trading tips on the website or a friend of the investor tells the investor that the particular currency is overbought/oversold, the investor is shortsighted.

Investors should look for people who trade with them. Once they meet most or all of the criteria and have technical evidence, they should trade on their own analysis.

7. Use a top-down method and follow the trend


This approach always looks at the highest times (usually on a weekly chart), then every day, hour, etc. Trends, support and resistance observations at higher time scales are always stronger and more reliable. This helps investors gather more trading information for themselves and improve their profit probability. If an investor sees a downward trend in the weekly and daily time range and intends to sell within the hourly range, the risk to the investor is relatively reduced, as the overall trend will not affect the investor even within a larger time range.

There’s a saying that “the trend is your friend,” which is very true. By tracking trends, investors can move with the trend and reduce risk.

8. Don’t give up when you have a losing streak
9. Keep your profitable profit on you


Maintaining the profitability that is good for investors is ensuring that investors have a pro-rrr (risk return ratio) for their trades. If the investor’s stop-loss point is 40 but the profit point is 120, then this is a 1 to 3 return on risk, which lets the investor subtract two additional trades before the breakeven. There was once a trader who won just 35% of his trades but had a steady monthly profit. That’s because his RRR is always several times higher than the risk he takes on.

10. Trade like a bricklayer!

Bricklayers work the same way every day, and so does the trade. If investors keep looking at their trades every three minutes and feel their heart racing each time they trade, they are either taking too big a risk on their money or they are not in the mood to trade properly. It becomes profitable to master your emotions and make reasonable trades, consistent in the way you trade and the strategy you execute.