Principles of working on Forex.

Most novice traders almost instantly lose money on the foreign exchange market, the main reason for this fact is a simple ignorance of the basic principles of working on Forex. Moreover, there is nothing complicated here; it is enough to accurately understand what needs to be done and what should not be done under any circumstances when trading.

Forex principles are a set of rules that a novice trader should follow; in fact, these are some tactical decisions for successful trading on the stock exchange.

Conventionally, they can be divided into two main categories - capital management and transactions. Let’s move on to a detailed consideration of this topic.

Principles of capital management.

1. The size of the deposit on Forex - this aspect is especially important when trading using the scalping strategy, no matter what skeptics say, but this is the best option to earn money with a small amount in a short time.

The main mistake traders make is trying to earn the maximum amount of money by constantly increasing the volume of transactions through a deposit.

I remember two of the most striking examples of correct and incorrect deposit management.

In the first case, a trader with an amount of 3,000 rubles managed to increase his deposit to 400,000 thousand in a few days, the result is truly unique.

But, unfortunately, the next day the deposit was drained to 100 rubles. The second option is a more successful example of the application of Forex principles, the initial amount of 300 dollars was increased to 2000 in a short time, followed by a withdrawal of 1500. And a series of unsuccessful transactions drained the deposit.
After some time, trading was resumed again with an amount of $500, now the deposit was brought to 1200. Again the withdrawal was $700. This trading scheme was used for a month and as a result, the profit on the account reached $2,300.

From the above examples it follows that the main principle of money management with risky Forex strategies is the timely withdrawal of profits.

2. The size of the leverage – it is this factor and the discrepancy between the size of the deposit and trading volumes becomes the main reason for the loss of the deposit. On Forex, the largest price jumps rarely exceed 1%, which, when trading without leverage, will correspondingly lead to losses of 1%. If you use a lever of 1:100 or more, such a movement will already cause a stop out .

Therefore, one of the Forex principles says that a novice trader should not use leverage of more than 1:50.

Principles of making transactions on Forex.

1. Mandatory use of analysis - no matter how you think.

To ensure that the existing trend will last as long as possible, always conduct at least a superficial analysis of the market. Sometimes the situation changes during the process, which prevents you from making a mistake. 2. Trading at opportune times only – that is, trades are opened only when a favorable situation arises.

There are a lot of traders who trade only when a flat occurs, others stubbornly wait for messages about the interventions of the National Banks. 3. Stop in time - I have heard more than once that a trader lost his deposit as a result of 10 consecutive unsuccessful transactions.

Therefore, the main thing is to stop in time after 2-3 unsuccessful trades; in most cases, the loss only increases. In the article I did not present most of the well-known principles and rules of Forex trading; you can read them in the article “ Forex Rules ”.