Forex
Trading Rules: Introduction
Why Trade in Currencies?
There are 10 major reasons why the currency
market is a great place to trade:
1. You can trade to any style - strategies can be built on five-minute charts, hourly charts
,daily charts or even weekly charts.
2. There is a massive amount of information -
charts, real-time news, top level research - all available for free.
3. All key information is public and disseminated
instantly.
4. You can collect interest on trades on a daily
or even hourly basis.
5. Lot sizes can be customized, meaning that you
can trade with as little as $500 dollars at nearly the same execution costs as
accounts that trade $500 million.
6. Customizable leverage allows you to be as conservative or as aggressive as you like
(cash on cash or 100:1 margin).
7. No commission means that every win or loss is
cleanly accounted for in the P&L.
8. You can trade 24 hours a day with ample liquidity ($20 million up)
9. There is no discrimination between going
short or long (no uptick rule).
10. You can't lose more capital than you put in
(automatic margin call)
Fair Warning
This tutorial is designed to help you develop a
logical, intelligent approach to currency trading base on 10 key rules. The
systems and ideas presented here stem from years of observation of price action
in this market and provide high probability approaches to trading both trend and countertrend setups, but they are by no means a surefire
guarantee of success. No trade setup is ever 100% accurate. That is why we show
you failures as well as successes - so that you may learn and understand the
profit possibilities, as well as the potential pitfalls of each idea that we
present.
The 10 Rules
1. Never Let a Winner Turn Into a
Loser
2. Logic Wins, Impulse Kills
3. Never Risk More Than 2% per Trade
4. Trigger Fundamentally, Enter and Exit
Technically
5. Always Pair Strong With Weak
6. Being Right but Being Early Simply Means That
You Are Wrong
7. Know the Difference Between Scaling In and
Adding to a Loser
8. What is Mathematically Optimal Is
Psychologically Impossible
9. Risk Can Be Predetermined, but Reward Is
Unpredictable
10. No Excuses, Ever
Trading is an art rather than a science.
Therefore, no rule in trading is ever absolute (except the one about always
using stops!) Nevertheless,
these 10 rules work well across a variety of market environments, and will help
to keep you grounded - and out of harm's way.
