Sometimes, an urge to get everything at once prompts beginning traders to gather information about Forex and trading techniques in any sources they come across. Video tutorials on YouTube, interviews with mature traders, relevant books - all this content is useful unless consumed chaotically and without thinking. With such an approach, a learner may get undesirable results. It is hard to create an efficient base with scrappy knowledge. Still, in a great variety of informational resources, it is possible to find certain rules that can lead a trader to profits. For your convenience, we have summed up these rules in this article.

What are trading rules and what are they intended for?

Forex rules are unofficial guidelines accepted by traders. Following these rules, you can better organize the trading process and increase profits. In other words, it is the experience accumulated over the years that mature traders share with beginners.

Forex trading rules are designed to help market participants develop their skills and achieve new victories. If a trader learns these rules and applies them skillfully in real transactions, they will be able to comprehend all ins and outs of trading over time, and, consequently, increase their profits.

You need to understand that even detailed forex rules are not the magic key to instant and limitless profits. The application of these rules in daily trading is a long and painstaking process that requires attention, diligence and involvement from a trader.

Main Forex trading rules

Never trade on schedule

You should not start trading just because you turned on your computer and you have a couple of free hours. Forex professionals recommend getting prepared before opening a deal. Thus, you need to develop a trading plan, consider numerous scenarios of possible market movements, and analyze the market situation in detail. Only after the trend direction is determined and the necessary orders are set, you can safely enter the market.

Keep your emotions under control

Never let your feelings prevail over logic and reason. Newcomers to the Forex market are often too emotional and prone to panic attacks while trading. A loss of self-control leads to rash decisions and, as a result, financial losses. Keep calm whatever happens: stop, pause, consider the situation from all angles, and only then get to the action.

Diversify your portfolio

A great number of currency pairs are available for trading on Forex. This allows traders to diversify their investment portfolio, thereby reducing risks. Depending on the level of volatility, some currency pairs are considered less risky, while others are potentially more profitable but imply a greater risk of losses. If a trader shares their funds between these two different types of pairs, they will be able to reduce risks.

Invest the money you can afford to lose

It is unwise to invest everything you have or get a loan for that purpose. Forex trading is not a win-win lottery. Sometimes, profits come only after several losing trades. When traders risk all their savings, they are not able to objectively and soberly assess the situation. Therefore, they are doomed to make mistakes. You should put at stake the money you can afford to lose, i.e. a loss of it will not cause you any significant trouble. In such a case, you will be able to easily shrug off the unpleasantness of losses and devour the sweet taste of winning trades.

Rely on market analysis

Forex trading rules are based on technical and fundamental analysis. Trading blindly or in the hope of getting lucky is doomed to fail. Every trader should rely on hard facts and statistics. To correctly assess the market situation, it is important to have up-to-date economic and financial data. Intuition and assumptions are useless here. Any experienced trader knows that it is too risky to enter the market without learning the basics of technical and fundamental analysis. By the way, you can study the basic concepts and principles of fundamental analysis on the InstaForex educational resources.

Take your time

Most of the forex rules and strategies are designed for long-term and stable trading. Even market professionals do not have any secret tricks that can make a trader rich in one day. Forex trading is hard daily work, which profits increase only over time. You need to be patient and take your time. Wait for the perfect moment to open a trade and never take rash chaotic actions that can cause you great losses. Perhaps the main rule of the forex market is that restless and impatient traders often lose.

Communicate with other traders

Forex trading communities are a kind of an interest group with a friendly atmosphere. Its participants share knowledge and their findings with each other. Besides, they exchange practical solutions, improved strategies, and new developments. Participate in major investment portals, leave comments on professional blogs and be sure to visit one of the largest traders' forums created by InstaForex.

Stay positive and accept losses calmly

Failures occur on Forex quite often. Experienced traders take losses calmly unlike beginners who are often stressed about losses. It is important to understand that no trader, even the most famous and successful ones, can avoid a losing streak. This is an integral part of trading. By incurring losses, a trader gains valuable experience. And this is more important than money because many years of experience make the trading process easier and more efficient.

Always remember to rest

Forex trading continues round-the-clock. Withstanding an emotional load five days a week is difficult even for the most seasoned traders. Firstly, overwork and overexertion cause serious harm to health, and secondly, when you are tired, you make mistakes. The solution is simple - take a break from Forex trading. It is important to create a clear timetable for observing the market and include breaks in it.

After opening a trade, many beginners cannot help but watch a chart, nervously following quotes changes. In fact, it is useless. No trader can influence the market dynamics. Stop loss and take profit orders can help you to feel more confident and take a relaxed approach to charts monitoring.

Keep track of the latest news

Technical analysis is one of the most popular methods of market research. However, the fundamental analysis also plays an important role, as global economic and political events are the key drivers of quotes changes. Every Forex trader should keep an eye on interest rate decisions of the US Federal Reserve, GDP growth rate in the European Union, and many other important releases that you can find on the Forex analysis page of InstaForex. Without this information, you risk making rash decisions when entering the market at times of high volatility amid the publication of important economic data.

To sum up

Following the above rules of forex trading neither guarantees 100% profits nor can it help totally avoid losses. Still, these rules can lead traders to success in the currency market. They are especially important for beginners. These trading basics can help you avoid common mistakes, select trading strategies more thoroughly, and also protect your capital from losses.