Forex traders know that one principle is essential: ‘protecting capital’. This maxim serves not just as advice, but it forms the basis of long-term survival, as without capital, there will be no trading, recovery, or opportunity. So, now you can judge the importance of the question, ‘What is the golden rule in forex?’
What is the Golden Rule in Forex? _ Protect Your Capital at All Costs
Your capital is essential. Every trade that risks too heavily threatens to sideline you permanently from participating in the market. However, protecting it ensures you can seize new opportunities while learning, growing, and eventually reaping profits from participating.
How to Live by the Golden Rule
Risk Small, Survive Longer
To improve long-term success when trading, set risk at 1-2% of your account per trade and always use proper lot sizing or stop loss orders.
Leverage Only Disposable Money
When trading, never use money that is essential, such as rent, bills, or savings accounts, to trade.
Emotional Stress from Trading
‘Scared money’ can wreak havoc with decision-making abilities and lead to emotional volatility and stress that lowers confidence.
Control Your Emotions
Stick to your plan, not impulses. Fear and greed can destroy financial accounts quickly.
Keep Learning
The markets are dynamic, and you need frequent surveys in strategy, risk management, and psychology to keep you up to date and flexible in this ever-expanding business.
What is the Golden Rule in Forex? _ Important to Stay Long in the Game
Disaster can be avoided, though not without losses. Losses are an essential part of the game, but you must control them without hurting your future. Traders who abide by the ‘Golden Rule’ tend to stay long enough in the game to build consistency, while those who disobey tend to quickly become failures.
