10 rules of trading forex

Market Analysis

Named the best trader by CNBC, Lous Borsellino is known worldwide as an expert in futures and other financial instruments. His 20 years experience « on the floor » at the Chicago Merkantile Exchange made him one of the most famous and thriving trader on futures and America`s S&P 500 index.

Following his vast experience gained on the stock exchange markets and as an individual trader, Borsellino draws attention especially on the psychology of tranding and capital management methods.

He concludes:

« Each transaction must follow what I call training, target and launch! »

Preparation is the first step of a transaction, and includes tracking and analyzing graphs, determining the strategy within the day, purchase and sale prices, support and resistance levels.The first phase also includes the release of thoughts that are not related to trading, and which can prevent adoption of important decisions objectively.

Target. We follow the market trying to imagine scenarios from the first phase. For instance, if we have noticed a strong level of support and the market opens above this level, then increases slightly, and begins a downward motion, then we prepare to act near the level of support.

Launch. This the moment when the facts told are materialized in one action.First we identify and fix the level of the price, and then we execute the transaction, placing the corresponding stop loss and take profit orders.

"This is what it should be developed, and money will come as a result Louis Borsellino".

Louis Borsellino draws attention on the mental state of the trader.For this purpose, he publishes in "The Day Trader", a set of rules entitled: ” Ten rules for trading”.

1. « Trade for success, not for the cash ». Your objective should be a properly executed transaction. We all want to thrive and be rich, but our goal must be success.

2. « Discipline ». The most important quality in a trader. We must have control of our mind and emotions in order to trade successfully. Even if we use technical analysis, without discipline it is very difficult to achieve profitable trading. A disciplined trader, whether he had lost or won, can always return to trading the next day.

3. « Know yourself ». Knowing if you can deal with the risk, or if only the idea of hazard gives you shivers.

4. « Get rid of ego ». The fastest way to finish your career as a trader is to allow your internal ego to influence your decisions.The more prosperous you are as a trader, the more difficult it is to get rid of ego. You must dictate your ego to shut up in order to be able to the act based on the market analysis. One becomes truly a successful trader only when he overcomes his own ego. Thinking that you trade profitably because you possess a certain skill, or more dangerous, because you master the market represents the way to an inevitable bankruptcy. When you are successful do not become euphoric, and when you register losses do not become pessimistic or even worse, depressed.

5. « When we are in the market we can not speak of hope or prayers ». Market grows when there are more buyers than sellers and the other way around. Market does not increase because you want it to, and it does not decrease because you have a short position and you pray. I've seen many traders who were looking at the computer screen with panic, actually they were praying for the market to move in one direction or another. They were clinging to their lost positions and did not want to get out of them. They were hoping, wishing and praying for the market to return and evolve in their direction Louis Borsellino". If you decide to close a position being on loss, and then the market moves in the direction you were previously, you should not regret, you congratulate yourself for your discipline.

6. « Let your profits grow and stop the losses quickly ». Establish the risk that you are willing to take, and when this is reached close the transaction. On the same time, let the profits grow, without becoming greedy. If use technical analysis, establish the entry and the exit points. You will never go bankrupt marking the profit, however you can go bankrupt standing too long in a profitable position that turns against you.

7. « Estimate the trading time and the expectation time ». If the market has no clear direction, wait for one to form. Be present in the market with the mind, not with money.

8. « Love both negative and positive transactions ». Negative transactions are the best teachers. A negative transaction is made when there are certain losses in one`s training and thinking. This will push the trader to improve himself.

9. « After a couple of unprofitable tranzactions, take a break ». Use this break to calm yourself and stop thinking about your losses. Watch the market, re-examine your strategy, then start trading again.

10. « Do not break this rules! »