Currency Trading Rules

Currency Trading Rules

1) Your maximum daily loss limit should be 2% of capital. This

allows you to trade without fear or emotion; knowing that your

worst day will not hurt you.

2) Be patient with winning trades. Don’t look for excuses to take

profit; use trailing stops based upon a systematic formula for

locking in profits.

3) Trade active currencies and only when significant price change is

occurring; trade in the direction the market is going.

4) The shorter the time frame, the more random currency

movements become. In the absence of news, don’t look for

fundamentals reasons to justify holding onto a losing position.

5) Traders, like the market, have up-trends and downtrends; when

your trend is up trade aggressively and when it’s down tread

lightly.

6) If you get into a currency position at the wrong price and time,

get out right. Getting in and out wrong is very expensive.

7) Economic news releases oftentimes create a move much greater

than the news itself justifies. Get use to this, it’s the norm and not

the exception.

8) Waiting is difficult and stressful when you have an open position

and the price is fluctuating in a narrow range. Get use to it; the

market range trades 80% of the time.

9) Never, under any condition, add to a losing trade.

10) Don’t try to enter the market at the top or at the bottom, allow the

trend to gain a foothold and join the move in progress.

11) Don’t spread yourself too thin. Focus on one or two currencies

and get to know them well.

12) Each currency has it’s own trading personality which must be

learned from experience.

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13) Trade where the market is going not what the price is; avoid

thinking the price is too high or two low.

14) Always remain true to your trading plan. That means maintaining

the discipline to control losses.

15) Keep it simple. The more indicators the more ambiguity.

16) Follow the market wherever it wants to go; don’t waste your time

predicting where it will go.

17) It’s easy to take money from the currency markets; the tough part

is not giving it back.

18) When everybody agrees you have the right position, you have the

wrong position.

19) Take windfall profits whenever you can. If you put on a trade and

get a quick 50 points take it.

20) Trade with your head. Not over it.