Friday, 2 October 2009

Forex Trading Rules

Forex Trading Rules

Knowing the rules that govern how trades and investments are made is advisable before you begin trading in the Forex. Some of this rules and strategy tactics can be a bit overwhelming to a beginner trader.
Some can be learnt along the way, such as price limits but the most basic ones required of a new trader are outlined below. They should help you maneouver successfully in the Forex.Don’t Over Leverage Your Portfolio.
One good thing about leverage is that it can generate good profits for you even if you don’t invest as much as the “big boys”. Keeping your leverage low is the way to go as it lowers potential losses. Over leveraging your portfolio is a risky move and may leave you with a lot of debt. Your leverage should always be within your portfolio, especially if you are a beginner trader.
Know when to quit
Probably the most important rule of them all. What many traders fail to do is recognize that bad trades are exactly that-bad trades. They hang on to them hoping for an upward turn and in the process incur even more losses. Knowing when to quit also means knowing when to hold on to your trades. Remember that even the most successful of traders also occassionaly lose money off of the Forex. The trick is to minimize your losses, and maximize your winnings.
Knowing when to fold on a deal can be the difference between minimal loss or massive loss. Keep close watch on your trades so you can get out when you should. If you have researched the trade before, you will know what the breaking points likely are and be able to make this decision easily.

Research trades
As they say, knowledge is power. Knowing every thing about a trade prepares you for what might happen in the future. The whole process of researching a trade might seem very boring, but is worth the time.
Simply beginning to trade with no idea on the issues that influence a trade is asking for trouble. Such an approach guarantees that you will lose money. o, take the time to do a little research before you begin.
Place Stop Loss Orders
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The stop loss order is something that should be placed right along with your entry order. This type of order protects you from a potential loss getting out of hand. If the market takes a dive, you will be protected with the stop loss order. You must figure out however, before placing the order, at what point you would want to cut your losses.
These basic rules should guide you if you intend to begin trading on the Forex market. Follow them to the letter to ensure that you profit off of the Market

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