The thought of making massive amounts of money from forex trading, investing in stocks, or mutual funds is exciting. You get that sense of excitement as if you’ll be the lucky winner of a lottery’s grand prize. But truth be told, the chances of making it big in trading and investing come with prices and sacrifices.
I hate to break many people’s expectations that forex trading can make you instant massive amounts of money, but that is not how it works. Forex trading includes strategies, pacing, timing, and wise decision-making skills to succeed. Unfortunately, many don’t understand this before diving into the market.
As a result, many end their trading journey unhappily and disappointed. That’s why every trader must have rules as guidance in their forex journey. If you’re one of the many who want to try forex or want to improve your trading journey, here are seven rules you can live by and try.
1 – Manage your expectations; know that trading success does not happen overnight.
The first rule that you should follow is managing your expectations when trading. I’ve mentioned earlier that many people end their trading journey unhappily. One of the reasons they ended it that way is because they started their trading with unrealistic expectations.
If you start forex trading with the expectation that you’ll double what you’ll invest in a few days, then you won’t likely like how long it will take to grow your money. Entering the forex market with a gambling mindset will only disappoint you. To have a great start, manage your expectations and know that trading success does not happen overnight.
2 – Constantly learn about the changes, news, and updates about the market.
If you read or hear people talk about the forex market, you’ll often come across the word “volatile.” And when they tell you that the market could change in a blink of an eye, believe them. One of the mistakes many new traders make is relying too much on a piece of information they know.
Since the market is ever-changing, you shouldn’t be too complacent that the data you have now will still be the same tomorrow. Always remember that the market will constantly change due to the various flows of money in different countries worldwide. That’s why learning about the changes, news, and updates in the market is critical.
3 – Don’t be too aggressive in spending enormous amounts of money.
When traders get their first earnings or wins from trading, they tend to be aggressive and spend enormous amounts in hopes of doubling it again. They’re confident they’ll earn or double their money again because they already know what it’s like to trade in the market.
Often, this trading behaviour leads to other habits similar to gambling. Sadly, being aggressive with your trading investments could lead to undesirable trading results. It’s one of the reasons many have a negative experience in the forex market. To avoid being in the same situation, don’t be aggressive in spending enormous amounts when trading.
4 – If you’re not confident to trade alone, consider working with a forex broker.
Many don’t realise that trading in the forex market requires skills, knowledge, and strategies. Unfortunately, failing to remember this point leads people to poor and bad trading habits and decisions.
It’s no secret that the forex market can be confusing and overwhelming, especially if it’s your first time. Focusing and learning about the market can be challenging if you have a full-time and demanding job. But that doesn’t mean you can no longer trade. If you’re still eager to try the forex, consider working with a forex broker. Your chances of success are higher when you work with a professional and skilled broker.
5 – Have a trading plan that you can stick to and follow.
One of the many pieces of advice professional traders give to beginners is to have a trading plan. I’ve been saying that forex trading requires skills, knowledge, and strategies. And since the market is highly volatile, experts recommend having a game plan you can stick to and follow.
If you’re wondering why it’s to help you maintain and build control over your trading habits. The purpose of your plan is to support your trading strategies and manage your currency pairs wisely. Over time, your game plan will help you develop better strategies to make your trade better and wiser.
6 – Take note of your habits and decisions when you encounter losses.
Another tip professional forex traders advise beginners is to look at the trading journey as a long-term investment. Like other financial acquisitions like stocks, it takes a long time before you reap your rewards in the forex market.
In most cases, you’ll encounter a streak of losses before you reap and double what you spent. Losing money in your first trading encounters is normal. However, you should take note of your habits and decisions when you encounter losses. So the next time you trade, you’ll know what to avoid and improve.
7 – Set a spending limit.
Lastly, set a spending limit. Many people correlate forex to gambling because many lack self-control in spending when trading. That’s why it’s critical to set a spending limit. Ultimately, this last rule will be easy to follow when you practise the first six I mentioned above.
When you know what to expect, constantly learn about the market, have a trading plan, and learn from your losses, you’ll know how much to spend. Sometimes, even though you already have a plan and are familiar with the market, it’s still tempting to spend more than what you can in some instances.
That’s why it’s better to set a spending limit to avoid overspending, which could eventually cause you to make undesirable and impulsive decisions.
Make rules that will help you trade better and wiser in the long run.
If you’re planning to start forex trading, consider having rules to help you strategise your trading journey. You can start by looking at the tips and suggestions shared by experts or ones from websites, then combine them to make your rule guide. It’s better to list the rules you believe would work well for you. Any will do, as long as you stick to it and are proven to improve your trading journey.
About the author:
Bianca Banda is a writer for FP Markets, one of the best-regulated Global forex brokers with over 40 global industry awards—and counting, making them the trusted trading broker by many.
