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Basics of Profitable Forex Trading: 5 Golden Rules for a Beginner

NEWS STORY
12/05/2022

Trading is more an art than a science. Therefore, it is impossible to foresee all the collisions that may arise in the process of trading.

It is unrealistic to make universal recommendations for all situations. However, it is still necessary to have some kind of landmarks that will not allow you to stray off course. Therefore, you can try to establish certain rules to be always followed.

1) Don't risk what you can't afford to lose

Investing in the stock market requires informed decisions, especially in emerging markets. There are some rules for trading in the stock market. Here the movements can be very sharp both up and down, so we do not advise you to trade with the money that you have borrowed or the last money you have got. Risk as much money as you can afford to lose. Of course, it is quite difficult to lose all the money on stock trading, but if you value this money very much, then in case of temporary failures, you will "lose your head" trying to get back what you have lost, taking rash steps and losing even more. We consider this rule one of the most important for beginners - it allows you not to put your capital at great risk in the long term and not to "lose your head". Investing is not a game, the exchange involves deliberate, balanced decisions, and of course the proper choice of the best forex brokers for beginners.

2) Cut your losses - let your profits grow

Hold your greed and hide your hope away. Greed occurs when profits increase, and you are in a position - because of greed, we close a profitable position earlier than necessary. On the other hand, hope arises when the price goes against you, and you hope that the price is about to turn around and change for your profit, but usually this does not happen. This is one of the most important rules in the work of a trader - one might say that this is the "formula of success" in stock trading.

3) Stop regretting the mistakes you make

This is a very important rule that will help you stay calm in trading for a long time. Dale Carnegie said, "Young people who can't deal with anxiety die young." We recommend you start every day as a new day. Try to get out of your head all thoughts and feelings about past failures or successes - it distracts you! Concentrate on what you are doing now or, as Dr Elder says, "while playing tennis, keep your eyes on the ball." You need to trade Forex every day, no matter how much time you spend: constant trading forms a trading skill, without which success is impossible.

4) Don't put all your eggs in one basket

Although online trading can be your main job, you should clearly understand that you shouldn't put all your eggs in one basket. You shouldn't invest all your money in one asset in the pursuit of super-profits - calculate the risks, forming a portfolio of several securities from different industries. Taking an unreasonable risk is like trying to lift a barbell that will crush you as soon as you lower it to your chest. Protect yourself from losses by properly investing your financial resources in various areas. Diversify risks, but with a cool mind.

5) Strictly follow the chosen strategy

Strict adherence to the chosen strategy will not give you a steady profit but will increase the number of successful transactions compared to unsuccessful ones, so you shouldn't deviate from the trading plan in any case. If you doubt the logic of the strategy - do not use it on a real account - conduct a thorough analysis of the "demo", and then risk your own hard-earned money. Every second there are a lot of opportunities to make money on the exchange - no need to try to catch each of them, if you try to do so, you will have even more opportunities to lose your money. Catch only large fish and do not be distracted by anything.

Trading in securities (whether you are an investor or a speculator) is a very exciting and interesting activity. If you add a little discipline and time, this can bring you significant financial results. It doesn't matter how old you are, what you do, what education or degree you have. Do not break the rules of the game, and you will succeed.

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