5 Unbreakable Laws of Currency Trading

By: Ori Pas

There are five rules that I use that have saved me a fortune in the passed years.

I call them rules, but for me they are more laws then rules. That means that if I break them - I get punished (I lose money).

I am going to share them with you.

If you follow these simple rules, you will trade with more confidence and make more money.

Rule #1 - Never risk more than you can afford to lose.
Everyone loses money in currency trading.
That is a fact.
If someone tells you that they don't lose money in trades sometimes, they are lying.
Everyone also makes money in trades.
That is also a fact.
The secret is to make more then you lose.
So decide on a budget and stick to it. You can lose more then just money.

Rule #2 - Never risk more than 2% of your margin.
Always make sure you have reserves. You can lose all your money in one single position in a very short time.
So make sure to never risk more then 2% of your margin on a simple trade.

Rule #3 - Always use a stop loss order.
Always know where to place the stop loss order and stick to it. If you don't know where to put it or are not sure it is correct, don't get into the position. There will always be new and better positions.

Rule #4 - If you lost money on a position - don't trade the same day (accept your losses).
When you lose money on a position you always have the urge to get into a new position fast and earn your losses back.
At that time you can be sure that the market will always (and I mean always) move against your position.
If you lose on a position, accept your losses.
You will not make your money back. Don't trade again on the same day.

Rule #5 - Never involve your emotions.
To me this is the most important rule there is. And it is the hardest one to follow.
Don't fall in love with a position. What I mean is that you can be making money on a position and then it turns. You start losing your gains, but you have a get out mark that it has not reached yet. Don't stick to it, get out while you are ahead.
Don't have a feeling about a position.
Don't trade if you are having a bad day.

These are the five basic rules I follow, and they have saved me a lot of money in the passed years.

An easy way to follow them is to do what I did:

I printed them in big letters, framed them, and hung them up in my office where I can always see them while trading.

To prosperous trading,

Ori
MyForexGuy.com

P.s. - There is one more insight I need to share with you. It is not a rule but it is very important.
You don't have to trade every day.
Take your time, learn the positions you want to go into beforehand.
If you are having a bad day, the market will feel it and react accordingly.
Keep it safe, there will always be a better position to go into.

Trading
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