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Five Simple Trading Rules

13 Years ago | November 15, 2013 1/28/23, 12:00 AM

By John Bland

Five Simple Trading Rules for All Traders

1) In the words of Jay Meisler, treat forex trading like a business. Don’t treat it like gambling. If you take the perspective of a gambler then you will be destined to lose. The key to successful retail forex trading is capital preservation.

2) Forex trading is a game of odds not one of emotion. Before you start, you must realize that you are going to be wrong on a lot of trades. Any successful professional trader will confirm this. If you have an inflexible personality, this business may not be for you.

3) The biggest mistake many starting traders make is to get married to a position. Before you get into a position, figure out at what price level or time frame that you will be wrong. Honor you stop   Hope is not a trading strategy. If in doubt, get out.

4) It is obvious that every trade must have a stop. Experienced traders, those who have survived, will always have a stop. The problem with stops is that they are unpleasant. No one wants to take a loss and there is a tendency to second guess taking a loss when ultimately the market turns around and goes your way. Stops play the essential role of keeping a manageable loss from becoming unmanageable. This is THE key element in capital preservation. Jay Meisler has written a very useful article on how to place a stop. 

5) The trend is your friend. Don’t fight a trend and don’t buy just because a price has fallen or sell because it has risen. In forex, experienced traders position equally comfortably from the long and short sides. A EURUSD long is a USD short, and a EURUSD short is a USD long.



 

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