Top trading principles of successful forex/currency traders

There are thousands of different strategies and techniques that have been used by traders to make money in the forex markets. Despite this variety, you will find that successful forex traders of all different backgrounds will share the same trading principles that they abide by.

In this article, we will outline these trading principles that have been proven to work time and time again. If you are not implementing these already, then hopefully this article can inspire you to do so and help you find greater success with your currency trading.

Cut losing trades quickly - Holding on to losing trades in the hope that they will come back can be devastating for both a trader's account balance as well as their confidence. Successful traders always look to cut losing trades quickly and understand the consequences if they do not.

Let winning trades run - This leads on nicely from the last habit. Successful traders let their winning trades play out, rather than desperately banking profits on the fear of losing them. Successful traders know that large winning trades will more than cover the small losing trades.

Have a trading plan - Successful traders always have a trading plan and most importantly they stick to that plan. Their plan will outline what they should do in every scenario and prevent them from making decisions based on "gut feelings". Trading plans should include rules on entry points, position sizing, stop losses, exit points and money management. Successful forex traders want to give themselves an edge when trading currencies, and then let that edge play out over time.

Well organised - Successful forex traders are well organised and treat trading like a business. This includes keeping a journal where they can keep track of their currency trading and performance. In fact, currency trading software will allow you to keep track of such information and use it to gain more insight into patterns and your own personal tendencies. Over time this journal will provide a mass of valuable data to a trader and help them improve their performance further.

Don't risk too much - Unsuccessful traders look to get rich quickly or have that one massive trade that will change their lives. On the contrary, successful traders look to play the long-term game, compounding their accounts over time and never risking too much. Successful traders know that if you lose all your money, you can't play the game!

Don't need to be right - Trading is not about being right or wrong, it's just about making money and successful forex traders know this. Most successful traders have a win rate of between 40-60%, this means they are wrong 60-40% of the time. Being wrong and taking losses are simply part of trading and successful traders can look past this and focus on what's most important.

The more you can apply these principles to your own trading, the better chance of success you will have. These trading principles have been shared by trading legends over many years. We will leave you with a quote from the great Jesse Livermore; can you see which principle in our list this applies to?

"The only thing to do when a person is wrong is to be right, by ceasing to be wrong. Cut your losses quickly, without hesitation. Don't waste time."