When you have read some currency trading books or attended some online forex trading forums, you can quickly discover that there are more or less as many various currency trading methods as there are traders. Traders have their own techniques; but more than that, in foreign exchange trading there are numerous different methods of earning profits.

So there is not one great forex trading strategy that you have to apply to make profit from currency trading. Nevertheless, there are several principles that apply to the way in which you practice your trading and these are valid for just about anybody. These are the golden rules of trading.

1. Follow The Trends

Most foreign exchange trading methods and systems focus on determining trends and there is simple reason for that. Whether the trend is in an ascent or in a decline, get in to go long or short as adequate and do not go against it. Bucking the trend will see you losing money rapidly.

2. Preserve Your Funds

Risking too much on one transaction has been the failure of many newcomer trader. Never put up too much money on any single trade, however strong your instincts may be that this one cannot go wrong. Any of them go wrong.

So how much do you risk? It depends on your system and how much it concerns you if you lose all of your equity, but never exceed 5% of your account balance. 2% per position is a safer option.

Some traders keep the percentage as their balance grows, so that they gradually bet more in real terms on each and every trade. That depends on you but think about it very carefully before you do this. When you have more cash in your account, you will certainly be more discouraged if it is decimated, so you might want to maintain the same position size (lowering your percentage risk) as your balance grows increase.

3. Set Targets For Every Trade

Have a precise profit target for every trade, so that in advance of when you enter, you have already made the decision when you want to take the profit and close. Do not become greedy and try to stay in there for more and more.

On the other hand, if it turns bad, do not attempt to hang on in the hope that the trend will reverse back in your favor. Cut your losses and get out. Applying stop losses to do this on autopilot is a very prudent approach.

4. Don't Lean Purely On Your Own Perception

Why not? Because quite certainly you are not neutral. Let the pros support you, but always make your own analysis. The best way is using forex signals. There are many forex signal providers available on the net, but many of them are scammers. Always look at the track record, as only accurate forex signals will earn you profit, not the losers!

Those are the first four golden rules of forex trading: the principles that can help you construct moneymaking currency trading systems.

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