In order to become a successful trader, you must have sufficient risk capital, the loss of which (or parts of) will not completely destroy your morale - you must be able to handle this ordeal calmly and this should not effect your lifestyle in any way. Your mind should be on the market, not on your finances. You must concentrate on the task of trading, and must remain calm, in order to make the proper trading decisions. You should never use the last remains of your finances for trading - the responsibility and the pressure would be too great, and your mind would stray towards your finances, and not towards the market situation, thus greatly increasing the possiblity of mistakes.
 

Trade Defensively.

In football terms, "the most important rule to play defense, not offense". Think about what you could lose as opposed to what you could gain. Anticipate the "what ifs" and plan ahead, rather than have to react after the fact. To trade defensively, assume that the market is going to go against you. Calculate your maximum possible drawdown. Adjust your stop points, if necessary, to where you're comfortable. Develop a plan to get out of the market. Then if the market moves against you, you are prepared. Protect what you have.

Develop a trading plan and adhere to it.

Every trader should develop a personal methodology for trading. The methodology, or trading model, maybe based on fundamental factors, technical indicators or a combination. Before you commit funds in the market, get some evidence that your trading methodology is sound and profitable. An important part of your trading plan is to set a limit on what you are willing to lose. If you reach that limit. GET OUT. Stick to your trading plan and avoid impulse trades. If you don't follow your plan, you have no plan. A sound trading plan will also give you needed confidence under pressure. With specific guidelines to follow, you will also be less likely to trade impulsively. Do not follow a trading plan blindly, however. If you do not understand what the market is doing or if your emotional equilibrium is severely disturbed, then close out all positions. In developing your trading strategy, don't invest on the basis of market tips or rumors. It is your money that will be at risk. Before you trade, do your homework.

Control Your Emotions.

Recognize that all traders experience high levels of stress and suffer losses from time to time. Anxiety, frustration, depression and at times desperation, are all part of the trading game. Part of risk management is the ability to control these emotions. Don't let these emotions take control of your trading. Stay focused on what you are doing. Trade on the basis of informed, rational decisions, not emotions and wishful thinking. Taking an occasional day off may help you reduce stress and maintain a positive attitude. If you have been doing well, it is a well-deserved reward. If you have doing poorly, the break help you avoid battle fatigue and may help you see the market with a different perspective. A local stress management program may also provide important help.

If in doubt, Get out.

Personal doubts indicate that something is wrong with your game plan. Get out of the market quick if:
1) you don't know what to do
2) you can't sleep at night.

Know Yourself.

You need an objective temperament, an ability to control emotions, and to carry a position without losing sleep. Although trading discipline can be developed the successful trader appears to be unemotional about their positions. There are many exciting things happening in the market everyday, so it takes a hard-nosed type of attitude and an ability to stand above short term circumstances, or you'll be changing your mind and your position every few minutes.

Don't Over Commit.

One rule of thumb is to keep at least two times the money in your margin accounts that is needed for a particular position. Reduce your position, if necessary, to conform to that rule. This rule helps you avoid trading decisions based on the amount of money in your margin account.

Isolate your Trading from your Desired Profits.

Don't hope for a move so much that your trade is based on HOPE. Although hope is a great virtue in other areas of life, it can be a great hindrance to a trader. When hoping that the market will turn around their favor, speculators often violate basic trading rules.

Don't Form New Opinions During trading Hours.

Decide on a basic course of action, don't let the ups and downs during the day upset your trading plan. Decisions made during the trading day based on the price movement or news item are usually disastrous. Formulate a basic trading plan before the market opens or before opening a trade, then look for a proper time to execute the decision that has been made.

Take a Trading Break.

One successful trader commented. "When I fall to 90% of mental efficiency, I began to break even. Anything below that I begin to lose." A trading breaks helps you take detached view if the markets, and tends to give a fresh look at yourself and the way you want to trade for the next several weeks.

Don't Follow the Crowd.

When everyone seems to be long, they took for a reason to be short. When most of the advisory services are long, for example, the successful trader gets ready to move to the sideline or to take a short position.

Block Out Other Opinion.

Don't be influenced in your trading by what someone says, or you will continually change your mind. If you listen to these outside views, you may be tempted to change your mind only to find later than holding your own opinion would have been more profitable.

Don't trade too Many Currencies at Once.

You'll hurt yourself if you try to have the necessary information and "feel" of several markets. Learn to know your limitations, and trade within these limits.

If you have any questions or comments, we are always glad to help with any problems which may arise in training or on your real account. Just send us an email at: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Good luck!