Ten Rules for a Profitable Forex Trading

Just like any human endeavor, there are certain "rules" that guide my Forex trading. They may not be applicable to everyone, but they did wonders to my Forex deals. Because of the immeasurable benefits I reaped out of following hard after them, I named them "The Ten Rules for a Profitable Forex Trading."

1. Do not hesitate to trade the breakouts.

Technical analysis depend so much on chart patterns. So you have to be very well versed in the 5 basic chart formations - triangles, head and shoulder, double bottom, cup and handle, and triple bottom. As soon as you spot a breakout, trade it.

2. Do not forget the fundamentals.

You should always try to execute trades that are supported by the fundamentals and technicals. When you do just that, you increase your chance of winning in the trade.

3. Do not gamble.

Always remember that Forex trading is not like playing in a casino where you can do a "one-time, big-time" deal. Of course you can do that but be ready to find your account down to zero the next day. Gamblers have their place in casinos. If you want profit, be systematic in trading Forex.

4. Do not revenge trade.

Like many other deals, losing is part of the game. If you lose, just calm down and move on. Never hit the entry button again and trade twice or even thrice in the same position that you lost hoping you could get back and win. You will surely find yourself in a deep ditch once you lose again.

5. Manage your positions wisely.

Manage your positions wisely in the same manner that you manage your checks. Never risk more than 1% of your account balance in one trade.

6. Avoid trading in a highly volatile time.

Never trade during the release of high profile reports like the GDP. You cannot gauge how much a currency will move even with a report like that.

7. Trade on retracements.

If you missed a breakout or a strong, initial move in prices, don't just jump it. Wait for it to retrace so you can get a better price.

8. Be flexible.

The market is quite fickle minded. You just don't know what exactly the market wants. Sometimes it is best to adjust and be flexible.

9. Use a journal.

Journalizing helps you to keep track what's working and what's not in your trades. So you better jot them down.

10. Go out and unwind.

Forex trading is a tough job. It can become very straining. Sometimes you need to give yourself a break. Free yourself from stress. Clear your mind. Go out and unwind.

Jason Joaquin is an accountant and freelance business consultant. Currently, he is employed as Internal Audit Manager of a group of companies in southern Philippines.