Basic Principles of a Trader

We are going to mention some basic principles that the trader must follow in this market if he wants to have success, in opposite case, it is very probable that the trader loses money.

Here there are some principles to follow:

• Think Fast: Sometimes you need to adapt yourself to the market as it can change very quickly. If the direction or trend is reversing , you need to be able to adapt. Your skills should be utilized to finding an entry in the new direction . And important thing to remember is that you must never marry any position.

• Be Disciplined: : Follow your plan, strategy, or system and be faithful to yourself. Trading not only consist to buying or selling a currency, it also consist to have a reason for wich to hold that position. Having a predetermined stop loss and profit limit are a part of the trading plan. Your discipline in following your plan will enable you to survive during times of volatility or when the market is simply difficult to predict.

• Follow the Trend: Ideally , we all want to Buy Low and Sell High or Sell High and Buy Low. If you know the trend, then follow it.

• Do not place Stoplosses too close: Use your time to identify your entry points. It is important to be patient and give the market room to move in your direction. Define your limits of losses very carefully.

• Understand your risk tolerance: It is important to define prior to taking a position what you are willing to lose. Avoid moving your stop loss while you are in a position. This may work on some occasions but it will cost you dearly when it does not work out. Trade your plan and be disciplined.

• Accept losses, they are part of the bussiness: Prepare yourself mentally and emotionally for this losses. It is important to take time to recover and to clear your mind if you are going through a rough period. Remember, the market is your friend, not your enemy. Avoid fighting with the market.

• Buy in bullish markets ("Bull") and sell in bears("Bear"): Many investors dont follow this rule and sometimes operate against the trend. This causes psychological imbalances resulting in losses.

• Follow the trend, not your obsessions: If the trend is not clear, or in a range without definition, focus on searching for a well-defined trend.

• Resist the urge to operate against the trend: The trend is your friend until it changes. When it changes and your analysis confirms it, trade with the new trend.

• Never add to a losing position: This is the perfect way to lose. Look to follow the market and to enter winning positions to take advantage of a rest the market.

• Exit your positions when the trend shows signs of changing: When your analysis shows that the current move has runs its course, pay attention to these signs and be prepared to exit a position with a profit.

• Keep your technical analysis simple: Follow support and resistance, Fibonacci retracements and reversal patterns. There is always more to learn so keep studying to maintain your edge.

• Be honest: Recognize when you have made a mistake and learn from your errors. The market does not compensate arrogant intellectuals. Even Though it is important to maintain your point of view, in the end, the market is always right.