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The 10 Golden Rules Of Forex Trading

The 10 Golden Rules Of Forex Trading
If you want to become a successful forex trader, there is a real need to follow rules as well as develop strong trading habits. So what are the 10 golden rules of forex trading to help you trade successfully?

10 Golden Rules For Successful Trading

It is important for you as a trader to continuously condition yourself for success. 

Prior to starting your day trading, it's essential to go through your trading rules. 

Take a few minutes each day to complete it. 

This process should be rather be considered a constant reminder for you to be disciplined and manage yourself throughout the day and your trading session. 

Here are 10 very important rules you might want to follow to become a successful trader.

1. Trade The Best Forex Market Hours

Trade actively for the initial 3 hours of every major currency pairs session.

The forex market operates 24/7. But not all 24 hours can be regarded to be profitable for day trading. 

As a day trader, you should pay attention to the factors below:
  • Trend 
  • ​Levels
  • ​Momentum
  • ​Divergence
  • ​Volatility
  • ​Symmetry
The initial three hours of every major currency pairs session usually are considered to be the best because you will get big momentum price moves.

Here are some examples on how to trade price moves during the trading session:
  • ​Trade breakouts when price break a resistance or support level
  • ​Trade the bounce on a support or resistance level
  • ​Trade retracements in the direction of the trend
  • ​Trade tops and bottoms using divergence between price and momentum
  • Read candlestick patterns to trade tops and bottoms
  • ​Trade reversals when you get a bottom or top reversal pattern (like head and shoulders)
  • ​Forex news is to be respected to identify strong economic reports which can influence setups

2. Trade Your Trading Plan

Follow set trading plan and pre-market routine. 

Your trading plan could include the following:
  • ​Rules for your forex trading setups
  • ​Visual examples of setups
  • ​Entry rules
  • ​Take profit rules
  • ​Stop loss rules
Your pre-market routine could include the following:
  • ​Rules for your forex trading setups
  • ​Visual examples of setups
  • ​Entry rules
  • ​Take profit rules
  • ​Stop loss rules
Reading trading books and studying technical analysis, you can improve your trading skills and develop your trading plan to your style and needs as you become a better trader. 

3. Do Not Break Your Trading Plan

You always need to do your best to avoid breaking your trading rules.

Here are some tips on how to stick to your forex trading rules:
  • ​Have a checklist
  • ​Enjoy doing it
  • ​Be accountable
  • ​Reward yourself when you followed your rules
  • ​Punish yourself when you break your rules

4. Avoid Emotional Trading

Consistent profits are sure to follow you trade without emotions. 

It will lead to lesser pips out and more pips in, which gives you an exponential return in the long run. 

It is very important to control trading emotions, so before you trade, watch your emotions.

Affirm and visualize yourself being and acting like a successful forex trader on a daily basis.

5. Do Not Try To Catch Every Price Move

Overtrading is not a good thing.

This is often caused by impatience. 

When you trade setups with low profit potential your Risk Reward Ratio RRR will often be below 1.

This will lead to lesser pips in and more pips out.

So only trade when you have a good risk reward ratio.

6. Stay Consistent

Stick to your set and proven trading plan.

The plan that is being followed should not be changed, if it offers proven results. 

Consistency needs to be maintained, if your desire is to achieve success in trading. 

For 100% of the time, consistency is being practiced every day and in every trade. 

7. Do Not Fight The Forex Market

Do not make the mistake of fight the forex market. 

Doing so might get you sucked into doom because sometimes the market will go against you. 

Wait patiently for your setup. If you try to chase the market, you will never ever be really profitable.

With patience, wait for your setups and follow the market.

If you are proven wrong (the market moves against you), cut your losses immediately. 

8. Trade With Confidence

To trade with confidence you need to believe in yourself, your trading plan and your rules.

The saying goes: "When in doubt, stay out".

If you feel uncertain of your trading or feel fear of trading, you will best avoid trading that day.

Review your recent winners to gain a positive confidence momentum.

Affirm and visualize yourself being and acting like a successful forex trader on a daily basis.

Use positive affirmations to your advantage – here is an affirmation I listen to every morning and night:

9. Make Trading A Step By Step Process

Trading should not be hard, it should be simple.

By having a sequence of instructions demonstrating perform your trading, you will simplify it a lot.

This step by step sequence of instructions can include everything that relates to your trading.

When you have a sequence and start checking things will build your positive emotions and momentum.

Your step by step process can include:
  • ​Make a cup of coffee
  • ​Start your computer
  • ​Open your trading platform
  • ​Review your trading rules
  • ​Pre-market analysis (example steps above)
  • ​Read your trading plan (example steps above)
  • ​Meditate
  • ​Live trading
  • ​Journal/track your trades and trading day

10. Play The Long Game

With the current equity present in your trading account, you daily desired profit might not be easily fulfilled right now.

Never risk a big amount of your trading account per trade, it will lead to big losses in the long run.

The truth is that big losses do hurt a lot. Hence, leverage smartly and avoid risking over 2% per trade. 

Forex trading is not a get-rich-quick-thing. 

As explained in the book "The Compound Effect" by Darren Hardy, this is how you get radical results:

Small, Smart Choices + Consistency + Time = Radical Results.

So you succeed in forex trading by:

Making smart choices (trades), being consistent (following your plan) and giving it time (patience).
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Johan Nordstrom Professional Trader Risk Management
I'm a family guy in my late 20's who learned how to trade the markets in a simple yet effective way. During university I studied investing and graduated with a master's degree in risk management. Quickly, I realized that I was onto something. I started helping friends and taking students. My students started getting results, spent less time in front of their screens, and their accounts grew consistently. Learn more about me here.
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