It is a well known fact that 90 percent of investors lose money in futures and forex trading, 5-7 percent break even and only 3-5 percent make money. Given the high casualty rate, it is all the more important for investors to approach futures and forex trading in the correct manner. Below are some of the rules that traders should consider following if he is to make money consistently in the futures and forex market:

1. PLAN YOUR TRADE AND TRADE YOUR PLAN. Lack of a game plan is not know what to do when you are wrong – and not knowing what to do even when you are right. You must have a trading plan to succeed. A trading plan should consist of a position, why you enter, stop loss point, profit taking level, plus a sound money management strategy. A good plan will remove all the emotions from your trades.

2. THE TREND IS YOUR FRIEND. Do not buck the trend. When the market is bullish, go long. On the reverse, if the market is bearish, you short. Never go against the trend.

3. FOCUS ON CAPITAL PRESERVATION. You main goal is to preserve the capital. Don’t risk your entire capital on one trade. Divide your trading capital into 10 equal parts and never lose more than 10 percent on one trade. If you lost the first trade, you still have nine more opportunities to be right. Putting all your capital on one trade is suicidal.

4. CUT YOUR LOSSES SHORT, LET YOUR PROFITS RUN. Learn to be very impatient with losing positions. Learn to resist the temptation of taking your profits too early. Success comes from holding on to profitable positions and riding with the trend for maximum gains while keeping losses small by getting out quickly when you are wrong. One way to protect you from suffering catastrophic losses is to place stop loss orders for every trade entered.

5. NEVER LET A WINNER TURN INTO A LOSER. The FX markets can move fast, with gains turning into losses in a matter of minutes, making it critical to properly manage your capital. There is nothing worse than watching your trade be up 30 points one minute, only to see it completely reverse a short while later and take out your stop 40 points lower.

6. BE EMOTIONLESS. Two biggest emotions in trading: greed and fear. Do not let greed and fear influence your trade. Trading is a mechanical process and it's not for the emotional ones. Logic wins, impulse kills. It can be a huge rush when a trader is on a winning streak, but just one bad loss can make the same trader give all of the profits and trading capital back to the market. Reason always trumps impulse because logically focused traders will know how to limit their losses, while impulsive traders are never more than one trade away from total bankruptcy.

7. DO NOT TRADE BASED ON A TIP FROM A FRIEND OR BROKER. Trade only when you have done your own research and analysis. Be an informed trader.

8. KEEP A TRADING JOURNAL. When you buy a currency or stock, write down the reasons why you buy, and your feelings at that time. You do the same when you sell. Analyze and write down the mistakes you've made, as well as things that you've done right. By referring to your trading journal, you learn from your past mistakes. Improve on your mistakes, keep learning and keep improving.

9. WHEN IN DOUBT, STAY OUT. When you have doubt and not sure where the market is going, stay on the sideline. Sometimes, doing nothing is the best thing to do. Also when things don’t work out right, then your best forecasts fail you – get away from the market and take a trading break. A period away from the market can be refreshing and will recharge you.

10. DO NOT OVERTRADE. Ideally you should have 3-5 positions at a time. No more than that. If you have too many positions, you tend to be out of control and make emotional decisions when there is a change in market. Do not trade for the sake of trading. Inexperienced traders can easily become overconfident after a number of winning trades. This can lead to overtrading – which is dangerous. One can be right 7 times out of 10 but the three times that you are wrong can wipe you out if you had over geared yourself because of overconfidence. Success comes from prudence in money management. Never overtrade.

11. NEVER RISK MORE THAN 2% PER TRADE. The most important thing that you should know is how much you are willing to risk in a single trade. This is more important than your trading strategy. I said don’t risk more than 2% in a single trade. But if you are a risk taker and want to be aggressive, you can go up to 5%. Don’t exceed 5%, stay between 1-5%. If you are risk averse and are conservative, on the other hand, you should consider risking between 1-2% only.

12. TRIGGER FUNDAMENTALLY, ENTER AND EXIT TECHNICALLY. Use both Technical and Fundamental Analysis. Both methods are important and have a hand in impacting price action. Fundamentals are good at dictating the broad themes in the market that can last for weeks months or even years. Technicals can change quickly and are useful for identifying specific entry and exit levels. A rule of thumb is to trigger fundamentally and enter and exit technically. For example, if the market is fundamentally a dollar-positive environment, we'd technically look for opportunities to buy on dips rather than sell on rallies.

13. NEVER MEET MARGIN CALLS. When you are wrong about the market, get out. Once you start procrastinating, very often prices will go against your position, further triggering a margin call from your broker. A margin call simply means that you are wrong in the market and your position should be closed out. Margin calls are made because people do not want to admit being wrong and take a loss; they hope the market will eventually go in their direction. To avoid this mistake, you should never meet margin calls. Just cut your losses and "get the hell out".

MONEY MANAGEMENT

Forex trading money management is one of the most imperative things you must learn before you really start up with live trades. The Forex money management principles discussed here would further teach you how to keep yourself away from the expensive mistakes many fresh forex traders make, frequently to the degree that they lose their full investment on the first few trades. Psychology is actually the most key factor to money management when it comes to forex trading. You have to be clever to separate yourself from any touching affection you might have got to your money. This is not extremely simple to do, but it works and it could be really done.

First and foremost, you have to mull over leverage and risk. It is sensible that you by no means risk more than two percent of your account stability on any forex trade. However, some go beyond and permit for as much as ten percent, but in no way more than that. This gives you the capability to endure market fluctuations in forex, and if the trade goes poor, you yet have money to try again. You must never function under the hypothesis, which you would profit from each trade. You must as well plan for losses. Therefore, most forex traders would tell you that the most excellent thing to do is to keep your gains big and your losses less. Develop your forex trading strategy around this idea.

Keep a proper track of your gains and losses. Keeping correct and detailed records of your forex account commotion would permit you to see whether or not the forex trading strategy is working, or if it requires being rebuilt. Never go blindly into trading without a means to keep follow of results. You would surely lose all of your money and never know why it happened.

Finally, it is extremely advisable that you first carry out a strategy on a forex demo account. Nearly all forex brokers provide a virtual demo account upon which you make trades in real-time, but with fantasy money, so nothing is risked. This is the most excellent way to test a strategy before you put your real money on the line. 

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