10 Game-Changing Forex Trading Rules That Will Make You a Superstar

Forex trading requires a specific level of discipline, wherein one must adhere to a set of trading rules and consistently maintain focus on their ultimate goal. Seasoned traders commonly refer to this attribute as self-discipline. 

“The key to trading success is emotional discipline. If intelligence were the key, there would be a lot more people making money trading.” – Victor Sperandeo  

Presented below are 10 revolutionary forex trading rules/principles that have proven instrumental in the path to success for numerous accomplished traders and can serve as a helpful compass in your journey too! 

1. Start trading with a reasonably funded account 

In other words, Dont trade with your last dollar! 

I believe that many of us will initially engage in trading using a demo account for a certain period to test our strategies. Once we feel confident in our profitable approach, we will transition to real trading accounts. Some individuals may choose to experiment with real accounts using small amounts of money to further assess their strategies and emotions, and this is perfectly acceptable. 

Nevertheless, I would like to explain why having a well-funded account is important. Lets compare a funded account of $100 with one of $5000. 

Assuming we achieve a 5% return in one month: 

• The $100 account would yield $5. 

• The $5000 account would yield $250. 

When we compare these two scenarios, the account holder with $100 is more likely to trade aggressively because the returns are relatively unsatisfying. Consequently, individuals with smaller accounts may experience psychological pressure to take more trades. This behavior increases the level of risk and ultimately raises the chances of experiencing stop-outs. As a result, the $100 account holder is more prone to depleting their account. 

On the other hand, someone earning $250 can perceive the impact trading can have on improving their lifestyle without the need to engage in excessive trading or take on excessive risk. Learn the best possible ways to Double Your Forex Account in a month or two! 

2. Set realistic trading goals  

In other words, Start with the end in mind! 

Becoming a disciplined forex trader starts with a hilarious step: setting a crystal-clear objective. Remember, there will be moments when you feel disheartened, but keeping your gaze fixed on the prize can prevent you from throwing in the towel. However, dont go overboard when setting your goals. Unrealistic ones, like aiming to earn a billion dollars in your first year of trading, can actually be more harmful. 

I‘ve talked about proper goal-setting before, and the key is to remember that a goal only needs two characteristics: clarity and achievability. So, apart from your burning desire to be a billionaire, a vague goal like “I want to succeed in trading” won’t cut it either.  

Here are some comical examples of reasonable goals: striving for a 1% gain each week or maintaining a 60% win rate.

3. Focus on fewer currency pairs, and master their dynamics. 

Narrowing down your currency pairs for trading is like having a secret cheat code for success! You get the superpowers of better market understanding, reduced risk, increased efficiency, improved analysis, and better manageability. Its like having a crystal ball that helps you make informed decisions, avoid losses, and stay laser-focused on your goals. Commonly traded major currency pairs include EUR/USD, USD/JPY, GBP/USD, AUD/USD, USD/CAD, and USD/CNY. 

4. Don‘t put more than 5% of your capital per trade 

In other words, don’t go all-in like a poker player on a trading spree! 

Embracing proper risk management entails trading within the confines of your position size. Here‘s a nifty guideline: try not to risk more than 5% of your capital. Since we don’t hold absolute control over the market, its unrealistic to expect a 100% success rate on all trades. Instead, our goal should be to achieve net profits in our account by the end of each month. 

Failing to set limits on risk or maintaining consistent trading sizes can result in losing all the gains accumulated over the previous month in a single trade. In the worst-case scenario, overleveraging on a trade could lead to a margin call. Its worth noting that different trading strategies call for varying risk management approaches.  

For instance, a swing trader may opt for smaller lot sizes compared to a scalper. Ultimately, it all boils down to your individual trading style. 

5. Utilize a micro lot size of 0.01 

The forex newbies should take particular note of this information. 

Picture this: youre a beginner trader, still trying to figure out which way is up in the market. With a micro lot size of 0.01, you become a risk control ninja! You can dip your toes in the forex pool without diving headfirst and potentially drowning in losses. 

Not only does it reduce risk, but it also grants you more trading flexibility. Want to try your luck with different currency pairs？ Micro lots have got your back! Theyre like little trading chameleons, adapting to any currency pair you desire. Plus, you can trade on smaller timeframes, making it easier to catch those quick market moves. 

But wait, there‘s more! With micro lots, you’ll be saving your hard-earned cash. These tiny bundles of joy come with lower trading costs. Brokers charge less commission since its a percentage of the lot size, and micro lots are like mini-me versions of their larger counterparts. 

6. Keep your trading margins low 

Dont let your Used Margin be a big bully! Keep it under control and make it less than: 

• 2% of your account balance with 1:500 leverage, because hey, even superheroes have their limits! 

• 1% of your account balance with 1:1000 leverage, because were not here to gamble our socks off! 

• 0.5% of your account balance with 1:2000 leverage, because its all fun and games until someone gets margin called! 

Remember, the higher the leverage, the higher the risks. And if you go crazy with lot sizes, youre basically juggling dynamite. So play it safe, folks! 

7. Dont gamble with all market twists and turns! 

Attempting to time the market is like trying to catch lightning in a bottle. 

Dont go chasing market unicorns! Setting up for counter-trend trades near major tops and bottoms might make you feel like a superhero, but beware! You might be tempted to pounce on every trade, fearing FOMO (Fear of Missing Out) on profits.

Trying to catch those elusive market tops and bottoms is like attempting to wrestle a charging bull or bear and expecting it to do a fancy dance. That sounds like a recipe for disaster, right？ Oh yeah, its a wild and risky ride! 

8. Place stop loss outside price structure 

When placing a stop loss for your trade, set it at a level that invalidates your trading setup. It should be difficult for the market to reach your stop loss. In a long trade, if you buy based on a bullish setup, set your stop loss at a level where the price has difficulty hitting. Place your stop loss below support, an area where buying pressure may arise, to push the price higher. Keep your stop loss at a distance from support, forcing the market to break it before reaching your stop loss.  

Make the market work hard to reach your stop loss. This concept applies to forex, stocks, and different timeframes. Identify the nearest price structure, such as support, an upward trendline, or a respected moving average, and set your stop loss away from it. By doing so, you can stay in your trade longer and avoid unnecessary stop-outs during random whipsaws. 

9. Accumulate small wins for significant growth 

For short-term forex traders, its all about collecting those little gains like a squirrel collecting nuts. Instead of chasing after elusive jackpots, they should seize opportunities in the market, manage risks wisely, and aim for steady profits. By doing so, they can gradually build a treasure chest of wealth, just like drops forming an ocean.  

Remember, taking a cautious approach not only shields them from stormy market weather but also ensures a long and prosperous trading voyage.  

10. Don‘t forget to backtest your Forex strategy  

Backtesting is the secret sauce in forex trading that makes traders feel like financial wizards. It’s the ultimate confidence booster, assuring traders that their strategies are pure gold and ready to rake in those profits. Plus, its the Sherlock Holmes of risk identification, helping traders dodge potential disasters and fine-tune their strategies to be as sleek as James Bond. 

But wait, there‘s more! Backtesting is the time-saving superhero, analyzing trade outcomes faster than a speeding bullet, thanks to historical market data. It’s like having a time machine that shows you the outcome of your trades in a snap, especially if youre playing the long game. 

Ready to trade？ CopyTrade might be an excellent starting point!  

Starting out in trading can feel overwhelming, and it takes time to become proficient in the basics of trading and technical analysis. For those looking to enter the market, copy trading can be a great way to begin. AximTrades Copy Trading services allow traders to imitate the strategies of accomplished professionals and benefit from their expertise. AximTrade carefully selects Money Managers from a pool of highly experienced and successful traders, making the entire process simple and quick. 

AximTrade serves individual traders in the financial market by offering various customizable trading options. Traders who prioritize flexibility and a fast registration process often opt for AximTrade because it can accommodate lower capital requirements. The platform continually improves its offerings to meet the needs of all traders, including features like adjustable leverage, low minimum balance requirements, competitive spreads, and efficient payment methods. 

Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers personal circumstances, investment experience, or current financial situation.