Five rules to survive the first stage of your trading career

Written by Brian Tran
Last updated: Thursday, 21 December 2006

1. Money management - In Forex, more than any other markets due to its highly leveraged nature, stops are a must. Keeping a strict maximum a percentage of the account balance to be risked per trade is a must. Without this rule, all strategies and method will fail period, no matter how good they are. Most traders win for a while but then blow out eventually without these rules.
   
   
2. Follow the trend - Scalping in this market with almost useless and fruitless. The brokers won't make it easier for you either with slippages fairly high compared to stocks and futures. Your strategies should be large wins and small losses, not the other way around. Even if you make 50% of the win, you're still ahead. Focus on breakouts and not on the ranges.
   
   
3. Don't overtrade - Rule #2 will keep you out of the market most of the time so keeps you from overtrading. Slippages and commissions will eat your account alive when adding things up. You should be making more than your broker, not the other way around.
   
   
4. Control your emotions - Probably the most difficult of the 5 because this problem stays longer than any other. Keep it in check constantly before, during and after the trade. They control you more than you think they do. Starting a small account like micro- or mini-lot accounts should help learning to control emotions.
   
   
5. Keep a journal/diary/blog - Apply these 5 rules should give you a head start but to keep it going and be reminded everyday of it, you must review your past trades and work toward perfecting it and work on reducing your mistakes.