There are at least 5 simple and basic principles that determine one's fate in becoming a better trader. These principles may seem simple, but they are essential keys to unlocking the door toward becoming a millionaire, or at least gaining a little more than losing.
1) Trading Plan
The first and most significant principle is trading with a regimented plan and system. Many traders do not realize that trading is more complex than how it seems. It should not be driven by merely a hunch or gut feels. A good trader is always ready with a feasible plan. This plan should include sophisticated research and examination of the currencies as well as stop and limit levels of the trade. This prepared plan should have an analysis of the expected upside along with the downside.
2) Cut Losses and run Profits
The next principle is cutting your losses at an early stage and being loyal to your profit earners. Some traders want to believe that their losses might still do well after a good waiting time. More often, in reality, the market moves against these non-profitable positions and make them lose hundreds of points, thus, not recovering enough to sustain even if they do rise again. Do not be caught in the belief that every trade should be profitable. If half the number of your trades are earning, you are on the right track. The key to making sure you still get enough even if only half of your trades are winners is to allow your winners to run and to minimize your losses.
3) Take smart Decisions
Another principle is playing smart-do not let your emotions rule in trading. Always be objective with your decisions. The old saying goes never marry your trades. While in the market, do not hope that it will move in a favorable direction just for you. Rather, be sensitive enough to see the factors that may have influences the changes that transpired against the original analysis you had mapped out. If the substantial signs are there, reconsider your losing position.
4) Do not overtrade
One more principle talks of overtrading. Do not do it. This is actually one of the most common mistakes traders commit. Leveraging your account too high by trading far larger than before puts you in a very vulnerable position. Always analyze the charts correctly and use this information to derive at a sensible trading decision. One good tip is to limit your leverage at 5 %; in this way, you won't be forced to exit a position at a wrong time-say, before you even get a win.
5) Develop your Trading
Lastly, the basic and most essential principle is awareness. Besides the given principles above and the common mistakes novice traders make, there are still simpler tips to keep you on the right track. Never follow blindly by entering the market first, figure things out before plunging in. Do not be greedy-be patient and set realistic targets daily. Admit your mistakes and never commit them again-be open to learning. Be confident and radiate a winning aura. Invest your valuable time to truthfully and completely comprehend the complexities and fundamentals of your Trading.
Keep all these in mind, and you will not go wrong.