As it was mentioned earlier, there are TWO timeless rules of Investing in FOREX:RULE #1) ~ Cut your losers; let your winners ride.
YOU WILL HAVE LOSING TRADES.
We do. Every FOREX trader does. The key to being a consistent, predictable, reliable trader is to, at
end of day, add up more wins than losses. And, when you KNOW (based off your trading rules), without a doubt, that YES, indeed you are, in a losing trade, don't keep losing money (lowering your stop loss) just to *prove you are right* or your rules are wrong (however you want to look at it).
Let's face it - you can't turn a sow's ear into a silk purse. You can't change spots of a leopard and you can't turn chicken poop into chicken salad. The best trades are usually "right" immediately (the techniques, rules, methods and strategies we teach at RapidForex.com will be your best indicator for just what a "right" trade really is).
Remember, people have been trading markets for a hundred and sixty years. The smart traders know there's going to be another trade. Cut your loses short and compound those winning positions.
RULE #2) ~ Thou Shall Not Trade FOREX Without Placing of a Stop Loss Order.
When you place a STOP order, right along with your ENTRY order, via your online trade station, you've just automatically prevented a potential loss from "running" too far.
Before initiating any trade, if you haven't already figured out at what point you would be wrong and would want to cut your loses or, at very least, reevaluate your position from sidelines, then you shouldn't be putting on trade in first place.
Show us a FOREX trader who doesn't use stop loss orders and we'll show you someone who loses a lot of money.
To make a profit, in FOREX, a trader (possibly YOU soon?) can enter market as a *buy position* (known as going "long") or a *sell position* (known as going "short").
For discussion, let's assume you've been studying EURO.
Your trading methods, rules, strategies, etc., tell you that prices will rise during a particular timeframe. So you buy EUR/USD pair (or, technically, you will simultaneously buy euros, base currency, and sell dollars).
You open up your handy trading station software (provided to you for free by online broker), which resides on your desktop, and you see that EUR/USD pair is trading at:
<< EUR/USD: 1.3242/45 >>
REMEMBER: quote to left of / (1.3242) refers to bid or "sell" price (what you obtain in USD when you sell EUR). The quote to right of / (1.3245) is used to obtain ask or "buy" price (what you have to pay in USD if you buy EUR).
