Have a Trading Plan – Make a plan and follow your plan. Trading without having a plan is a mistake.
Place Stop Loss Order – At the time of initiating a position, you must know your exit point to limit your losses. You should never ever enter the market if you are not sure about your stop-loss level to accept losses.
Protect Profits – When you make say 150 points profit, you should then be concerned to protect the profit. You should put an order to buy/sell back if the currency moves back to around 50-60 points. This ensures that you get at least some of the profits. When the currency moves to good levels then you can consider buying or selling again.
Don’t average – Don’t use averaging as an excuse to accept the fact that your existing position is a loser and should be cut. You may only average if you have high financial capacity. Only add to your winning positions.
Be patient – Develop the patience to wait for the right levels to take a position. Most losing positions are taken when the trader does not have the patience to wait for the right opportunity.
Learn from your Mistakes – Good traders recognize and accept their mistakes and cut their positions. And they never average. Inexperienced traders run losing positions hoping for reversals.
Keep emotions in check – When you make a bad trade, assess it again, develop a new plan and wait for good levels again. Don’t rush into new positions.
Be confident – Once you have formulated the right strategy and a decision is made to buy or sell at a certain level, do not hesitate to act when your level comes.
Be disciplined- Discipline is what separates good from bad traders. Good traders develop the discipline to wait for the right levels to trade with proper controls and disciplined use of stops.
Discuss your trading idea with Your Broker – Your broker should know your views, your profit goals, stop losses and the information that you need. Your strategy should always have a time frame, e.g., 2 – 3 hours, 24 hours or long-term. The decision must always be yours.
Manage your Risk – Always be prepared to take actions in case the market goes against you irrespective of what others are saying. After all, it is your money and you must take care of it in a responsible way.
Exploit Ranging Market – Since around 75% of the time market is ranging, find out about each day’s high, low and expected range (compare to previous day) and trade the ranges with protective stops. As most of you have experienced, when the market starts trending people are on the wrong side and lose money.