Just as there are rules and guidelines for foreign exchange trading systems when you are learning how to earn money on the currency market, there are also tricks for managing the human elements and habits that obstruct our success. Here are six golden rules for managing ourselves so that we can move smoothly from doubting beginner to professional currency trader.
1. Keep Cool
Seasoned traders do not let their trading be affected by their emotions or their emotions be impacted by their trading. They do not risk more because they are feeling like winning, they do not hesitate when the signs are right, or close a trade too soon out of fear. Likewise, they are unlikely to be overenthusiastic due to a gain, nor will they get angry, shout or kick the dog when they lose.
A person who is affected by his or her emotions will not succeed as a foreign exchange market trader. Self discipline can be learned but make sure that you have totally mastered your emotions on a demo account before you think of going live. If you are still taking uncontrolled risks you are not prepared for real trading.
2. Think For Yourself
Different traders have various techniques. This means there is limited value in getting advice from anybody else. Actually, except you know that the person follows the same method and techniques, the advice is probably useless to you.
Do not copy somebody else's system just because they seem to be earning profits with it. Do your own homework and check everything that you are told. Even then, consider carefully before dumping the system that you have followed before. There can be factors that you have not taken into account. Something that works for somebody else may not necessarily work for you.
3. Keep Records
Keep a spreadsheet detailing each transaction so that you can see statistics your own results. You do not unavoidably have to use it to modify anything, but refer to it often to remember of the many small trades that add up to success or failure.
What should you record? At a minimum, the currency cross, your position and the opening and closing prices. Still, these plain facts will be much more useful if you can also add why you entered the position. Did it comply with the criteria of your system? What made you anticipate that the trend would go your way? When you look back you will have a much better perspective of why your trading history is going well or not so well.
4. If In Doubt, Stay Out
Do not open a position if you are vacillating or unsure about it, assuming of course that you have a reason different than fear for your reluctance. A trade can only go one way or the other, so if it is not exactly right, it is wrong. Wait. There will be many better opportunities.
5. Limit Your Trades
Do not be drawn into thinking that you must never miss an opportunity. You do not have to be on top of many various currency pairs and jump into every market regardless of what else you could be doing.
6. Don't bet solely on your own judgement
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