Rule 3: Cut the losses the short, let your winning trades roll

Once a protective stop loss is in place, the best forex traders will always cut their losses short. When this happens, it’s important that you ask yourself this question: ‘If I did not put in this trade, would I want to enter the market at this present time?’. If the answer is a concrete no, it’s time to exit the market. Remember, minimising losses is a key trait of profitable forex traders. The other aspect to consider here is that profitable trades should be allowed to roll. A winning streak can sometimes last for a long time, while on other occasions they may only last for a few seconds. It’s important that you pay close attention to the latest market data and news while your trade is winning, in order to anticipate optimum exit points.

Rule 4: Trade with your eyes

The majority forex traders have that voice inside their head, which spreads self-doubt when trading. The successful forex soldiers have the ability to quieten that voice and focus on hard evidence. Consider how a military soldier needs to keep his or her head clear before an operation. It’s an absolutely vital component to success in forex too. As a trader, it’s vital not to get distracted by that voice inside your head. A rational and objective mind is what you really need. So how can this be achieved? Something which I practice actively is using my eyes to determine my next market move. I make a concerted effort to focus on the data and charts in front me to guide my thinking.

Rule 5: Do not run after your losses

All forex traders place losing trades from time to time. It’s part and parcel of a professional forex career. However, one characteristic that separates the consistently profitable traders from inconsistent ones is the ability to let losing trades go. The habitual reaction for some traders is to chase a losing trade in an effort regain the capital they may have lost. While there’s nothing wrong with the intention, wanting to make up ground on losses can lead to rushed and panicked thinking. Needless to say, such an approach can often lead to further losses. When you experience a losing trade, start afresh and put emotion to one side.

Rule 6: Keep your trading log organised

The ability to record data and evaluate performance is pivotal to a profitable forex trader. Usually, this analysis comes in the form of a trading log. This is where the mechanics of each trade is clearly written down, along with the profit and loss made from each trade. An accurate trading log can help a trader quickly gather the big picture about their trading performance and the effectiveness of their trading plan.

Rule 7: Be disciplined

Like most things in life, the best results come from consistently doing the correct things over and over again. Forex is no exception to this rule. Discipline is absolutely everything to a profitable forex trader. These individuals have well developed daily trading schedules, they stick to their chosen trading methodologies, possess clear exit strategies for their trades, and never let their hearts overrule their heads.

Conclusion: Take your ‘Trading Battle Plan’ to the next level

These rules are an excellent starting point for any trader who wants to become profitable and reach professional competency. My complete ‘Trading Battle Plan’ provides detailed guidelines on how traders can prepare themselves to withstand extreme pressure from the currency markets. Follow the link below to download your free copy of this educational ebook entitled ‘Trading: The Battle Plan’.

Chris Svorcik
Lead educational strategist
Admiral Markets