Tips for Responsible Trading
When you strip Forex trading down to its most basic level, it’s a very simple concept. You place your trade, the market moves and you end up being either right or wrong.
While that makes the market easy to be a part of, it also makes it very unforgiving. If you don’t give a trade your full attention and end up making an error in judgement, the market will take your money without remorse. And because you’re the only one in control of your trades, there’s no one else to blame. Personal responsibility therefore plays an important part in trading. It’s in your interests to preparing well, carry out a plan and ensure you’ve got a safety net in place in case things go against you.
The better prepared you are to trade, the more likely you’ll succeed in the market. And that begins with education. Whether it’s trying a Demo account, using tutorials, reading books, logging onto webinars, seeking professional advice or any of the number of other trading tools available, your education should never stop.
But at the very least, it should get you to a level where you’re comfortable trading on your own. If you can’t get to a point where you can’t trade without relying on the advice of others - or letting them overly influence your trading decisions - you’re effectively passing on some of your responsibility.
One of the most important things you can do as a trader is come up with a Forex strategy that suits your individual trading goals. But that’s the easy part. The hard part – and where your responsibility lies – is ensuring you remain disciplined, controlled and patient so that you follow through with your strategy.
Discipline is required to ensure you stick to your strengths and don’t go off track pursuing trades that aren’t part of your strategy. Control comes from ensuring you don’t trade on emotions or trade beyond your means, for example using too much leverage and risking more than you can afford to lose. Patience is required to remind yourself that trading is a long-term activity where you’ll benefit from gradual and continued growth.
Although you can’t change the volatility of the market, a responsible trader will take measures to protect themselves against it. For example, while you’re not able to completely eliminate losses, using tools like Stop Loss and Trailing Stops can significantly reduce them and help protect your overall account balance. Additionally, by being conscious of how much you’re prepared to lose before entering a trade, you’ll have a much better idea about when it’s time to exit the market.
Loss is an unavoidable part of Forex trading so if you’re not taking efforts to protect yourself against it, you’re not trading responsibly. Understand risk management, learn from educational resources and practice on a demo account before going live.