Business Basics Exam > Business Basics Videos > Forex: Learn and Master Trading (English) > 1.2 3 rules of trading the markets
1.2 3 rules of trading the markets Video Lecture | Forex: Learn and Master Trading (English) - Business Basics
FAQs on 1.2 3 rules of trading the markets Video Lecture - Forex: Learn and Master Trading (English) - Business Basics
| 1. What are the three rules of trading the markets? |  |
Ans. The three rules of trading the markets are:
1. Cut your losses: This rule advises traders to set a predetermined stop-loss level for each trade to limit potential losses.
2. Let your profits run: This rule suggests that traders should allow winning trades to continue moving in their favor by trailing stop-loss orders or implementing profit targets.
3. Manage risk: Traders should carefully assess and manage their risk by diversifying their portfolio, using appropriate position sizing, and avoiding excessive leverage.
| 2. How can I effectively cut my losses in trading? | |
Ans. To effectively cut your losses in trading, you can:
- Set a predetermined stop-loss level for each trade, which is the price at which you will exit the trade if it moves against you.
- Stick to your stop-loss level and avoid the temptation to move it further away to give the trade more room.
- Regularly review and adjust your stop-loss levels based on market conditions and the overall risk in your portfolio.
| 3. What does it mean to let your profits run in trading? | |
Ans. Letting your profits run in trading means allowing winning trades to continue moving in your favor without prematurely closing them. This strategy aims to maximize your profits by riding the trend or momentum of the market. Traders can employ various techniques to let profits run, such as trailing stop-loss orders, which automatically adjust the stop-loss level as the trade moves in their favor, or setting profit targets at predetermined price levels.
| 4. How can I effectively manage risk in trading? | |
Ans. To effectively manage risk in trading, you can:
- Diversify your portfolio by trading various instruments across different sectors or asset classes.
- Use appropriate position sizing, which involves determining the number of shares or contracts to trade based on your account size and risk tolerance.
- Set a maximum risk per trade, such as a percentage of your total account balance, to prevent excessive losses.
- Avoid excessive leverage, as higher leverage amplifies both potential profits and losses.
| 5. What are the benefits of following these three rules in trading? | |
Ans. Following the three rules of trading (cutting losses, letting profits run, and managing risk) can offer several benefits, including:
- Improved risk management: By cutting losses and managing risk, traders can protect their capital and limit potential losses.
- Increased profitability: Allowing winning trades to continue moving in your favor can lead to larger profits.
- Emotional discipline: Following these rules helps traders avoid impulsive decisions driven by fear or greed.
- Consistency: Implementing these rules consistently can contribute to a more disciplined and systematic trading approach, leading to better overall trading results.
Text Transcript from Video
hi welcome back to capex forex trading
comm in this video we're going to
discuss the three basic rules of forex
trading that you should bear in mind now
before we get into that in terms of the
content you will receive everything will
be in a video tutorial format the reason
for this is to enable you to follow
things a lot clearly now within those
video tutorials we will define and show
you strategies that we use on a daily
basis and that we have used for a long
time the reason is because we want you
to be able to identify and trade the
exactly the same setups with exactly the
same success rate however you will only
achieve this if you follow the
instructions and rules implied within
those videos and forex trading
strategies now if you're thinking at
this point that you will definitely
follow these instructions and why
wouldn't you believe me when I tell you
that when it becomes when it comes to
the real trading environment it can be
quite hard to remember everything you've
been taught and you may forget a lot of
the stuff that you that you have been
taught so if you do get to that stage
please refer back to the video in
question and make sure that those rules
are cemented in your choice in your
trading style so rule 1 is discipline
discipline is by far the most important
characteristic for any trader now
discipline comes in many formats so
first of all just like we explained you
need to follow all the rules that you
have been taught never make up your own
rules unless you have solid data that
supports your own rules when you have a
losing trade make sure that you never
double up on reinvestment in the next
trade to recoup all those losses okay
you have to be disciplined enough to be
patient to recoup those losses with
sound and proper money management
techniques also never trade setups that
are almost correlative with your rules
so unless this the setup that you see on
your chart is 100% correlative with the
rules that you have been taught or that
you have data on do not trade that
strategy you if you do this you may as
well trade a strategy that you've heard
someone else trades
without any ever
rule number two is understanding so sex
success rate now when traders or when
new traders come into the market they
think that if they follow the rules in
every trade that their hit rate will be
100% that is not the case there are
other factors outside of your control
like natural disasters or something that
a high-rent political figure may say
that will simply reverse your trade into
the opposite direction now this is not
your fault
but what you must do is make sure that
you don't become a victim of this event
so make sure that all your stop losses
are in place and understand that every
trade comes with a risk so don't change
your strategies just because you think
the strategy might be wrong okay your
strategy may not be wrong the only
reason or the only way white or the only
reason rather why you should change your
strategy is if you have solid data that
the strategy is in fact incorrect if the
strategy is only incorrect when big news
comes out then you must not trade this
strategy but you must adapt to the
market itself
and lastly emotional control now markets
are very volatile so don't let your
emotions be the same are you go up and
go down you have to be a solid thinker
and control your emotions in every trade
the thing is that the mark the trading
Forex is not a battle between yourself
and the market it is a battle against
yourself you must make sure that your
emotions are kept at bay because the
market does not care about you it
doesn't care about how many wins you
have or how many losses you have and you
should not care about itself you should
follow the rules that you've been taught
and apply solid emotional control to
every single trade now there may be
times in the market that you have to
simply stay away and trading can be
boring in this instance so don't trade
just because you're bored because the
chances are you going to experience a
loss okay and you're going to kick
yourself that you did this the one thing
you need to bear in mind that the next
day or in the next hour opportunities
will always be available so just be
patient and make sure that you follow
those rules
so in terms of rules that's all you need
to know for now we will see you for the
next video
Thanks
comm in this video we're going to
discuss the three basic rules of forex
trading that you should bear in mind now
before we get into that in terms of the
content you will receive everything will
be in a video tutorial format the reason
for this is to enable you to follow
things a lot clearly now within those
video tutorials we will define and show
you strategies that we use on a daily
basis and that we have used for a long
time the reason is because we want you
to be able to identify and trade the
exactly the same setups with exactly the
same success rate however you will only
achieve this if you follow the
instructions and rules implied within
those videos and forex trading
strategies now if you're thinking at
this point that you will definitely
follow these instructions and why
wouldn't you believe me when I tell you
that when it becomes when it comes to
the real trading environment it can be
quite hard to remember everything you've
been taught and you may forget a lot of
the stuff that you that you have been
taught so if you do get to that stage
please refer back to the video in
question and make sure that those rules
are cemented in your choice in your
trading style so rule 1 is discipline
discipline is by far the most important
characteristic for any trader now
discipline comes in many formats so
first of all just like we explained you
need to follow all the rules that you
have been taught never make up your own
rules unless you have solid data that
supports your own rules when you have a
losing trade make sure that you never
double up on reinvestment in the next
trade to recoup all those losses okay
you have to be disciplined enough to be
patient to recoup those losses with
sound and proper money management
techniques also never trade setups that
are almost correlative with your rules
so unless this the setup that you see on
your chart is 100% correlative with the
rules that you have been taught or that
you have data on do not trade that
strategy you if you do this you may as
well trade a strategy that you've heard
someone else trades
without any ever
rule number two is understanding so sex
success rate now when traders or when
new traders come into the market they
think that if they follow the rules in
every trade that their hit rate will be
100% that is not the case there are
other factors outside of your control
like natural disasters or something that
a high-rent political figure may say
that will simply reverse your trade into
the opposite direction now this is not
your fault
but what you must do is make sure that
you don't become a victim of this event
so make sure that all your stop losses
are in place and understand that every
trade comes with a risk so don't change
your strategies just because you think
the strategy might be wrong okay your
strategy may not be wrong the only
reason or the only way white or the only
reason rather why you should change your
strategy is if you have solid data that
the strategy is in fact incorrect if the
strategy is only incorrect when big news
comes out then you must not trade this
strategy but you must adapt to the
market itself
and lastly emotional control now markets
are very volatile so don't let your
emotions be the same are you go up and
go down you have to be a solid thinker
and control your emotions in every trade
the thing is that the mark the trading
Forex is not a battle between yourself
and the market it is a battle against
yourself you must make sure that your
emotions are kept at bay because the
market does not care about you it
doesn't care about how many wins you
have or how many losses you have and you
should not care about itself you should
follow the rules that you've been taught
and apply solid emotional control to
every single trade now there may be
times in the market that you have to
simply stay away and trading can be
boring in this instance so don't trade
just because you're bored because the
chances are you going to experience a
loss okay and you're going to kick
yourself that you did this the one thing
you need to bear in mind that the next
day or in the next hour opportunities
will always be available so just be
patient and make sure that you follow
those rules
so in terms of rules that's all you need
to know for now we will see you for the
next video
Thanks
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About this Video
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Nov 15, 2024 Last updated |
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