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The Rules For Winning At Foreign Exchange

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Investing in the foreign exchange markets can be a very lucrative style of investment for any trader. And just like any other style of investing, it’s essential to pay attention to some basic rules that can guide investors to success. Investing without sound criteria and fail-safe plans reduces the act to a form of gambling, and no investor in any investment strategy has walked away ahead by playing their portfolios like a blackjack table.

To be clear, no particular foreign exchange investment strategy comes with a list of commandments, if you will. But there are things known as basic strategies which can be applied to any trading situation and treated as a rule. Pay attention to these rules as you move along, and they will quickly and easily become investment habits. You should take note if a trade ever fails to generate gains, and analyse if you failed to follow a simple foreign exchange trading strategy – only then will you begin to realise as a more savvy trader that these rules can actually help you generate gains and avoid losses.

How To Win With Foreign Exchange Trading

The first and most prominent rule is to avoid trading with emotional motivation. It is easy to get into forex trading and assume that the nature of the investing is simply too easy to avoid making huge, risky trades. Cut back on your ego and don’t let it affect you personally if a trade doesn’t go the way you want. And most importantly: do not chase losses. All the currency trades an investor makes should be made on sound data and criteria that work in conjunction with charts and economic news. If you can support a trade with documentation, it’s likely it’s a wise one to be making.

How To Protect Capital With Foreign Exchange Trading

Most every trade can be made through a brokerage account with some simple stop losses and automatic trade triggers. When trading in the forex space, trades often rely on large amounts of leverage, meaning little fluctuations in gains and losses, can add up to big numbers. This means, you’ll want to take the proper steps to protect original capital and reduce losses. Consider triggering stop losses at intelligent markers, or when unrealized gain dwindles back down to original capital. Or use more elaborate brokerage services or forex trading software to constantly evaluate a currency pair to routinely and automatically update triggers that will determine when to exit a trade.

Can You Improve Your Foreign Exchange Trading Results?

Always. With so many resources available to new and experienced traders, it’s impossible to not always better your forex game. There are always ways to expand your portfolio in currency trading, without taking on too much additional risk. Yes, each new trade, or larger trade, inherently comes with risk, but if you follow the basic rules of forex trading, you can avoid some of the major pitfalls exhibited by less-experienced investors who run into losses that cannot afford.


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