4 Guidelines for Forex Trading I Follow
Forex trading may become a much easier activity if you follow your own guidelines. Alternatively, you can borrow some
- Risk only 3% of the total trading capital with each trade. Generally, it is quite hard to come up with the comfortable risk percentage value for your trades if you want to stick to a good risk management practice and still let your funds grow at a steady rate. For me, 3% is the optimal level — safe enough to save and high enough to gain.
Risk-to-rewardratio should be no lower than 1. Many currency traders prefer trading with a risk-to-reward ratio of 2 or even higher. This is also a problem of risk/gain balance. For me, the opportunities with the ratio higher than 2 are quite rare — perhaps, because I prefer high accuracy trades. If your accuracy rate is far from 90%, then sticking to a risk-to-rewardratio of 2 or 3 would probably be a better decision.
- Do not leave the positions open through the weekend. A weekly opening gap can be a killer. Do not underestimate it. As a swing trader, I prefer to open my positions at the start of the week, and I always close them before trading ends on Friday. The gap in the price rates, which usually occurs after a weekend, can make your
stop-losstrigger far from the levels you had planned.
- Wait before opening a new order after you have just traded. If you jump into another position right after you closed or opened a previous order is a straight road to overtrading and an empty balance. I always wait some time analyzing opportunities and resting from the Forex market before setting up my next order. Maybe, for extreme scalpers, this is not the best decision, but for the absolute majority of
medium-termForex traders it is.
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