When you have read a couple of trading books or attended some online forex trading forums, you can quickly discover that there are almost as many various currency trading systems as there are traders. Traders have their own methods; but more than that, in foreign exchange trading there are several different methods of earning money.

So there is not one top-notch forex trading method that you have to stick to make profit from forex trading. Nevertheless, there are several guidelines that apply to the way in which you practice your trading and these are valid for just about anyone. These are the golden rules of trading.

1. Follow The Trends

Most foreign exchange trading methods and systems concentrate on determining trends and there is simple reason for that. Whether the trend is in a rise or in a decline, get in to go long or short as adequate and do not fight with it. Bucking the trend will see you losing money rapidly.

2. Protect Your Funds

Betting too much on one transaction has been the failure of many rookie trader. Never risk too much money on any single trade, no matter how strong your instincts may be that this one cannot go wrong. Any of them go wrong.

So how much should you risk? It depends on your strategy and how much it concerns you if you lose all of your equity, but never more than 5% of your trading capital. 2% per position is a safer choice.

Some traders keep the position size as their balance grows, so that they gradually bet more in real terms on each and every trade. That is up to you but decide about it very carefully before you do this. When you have more funds in your account, you will certainly be more depressed if it is decimated, so you may want to maintain the same position size (lowering your percentage risk) as your funds increase increase.

3. Set Targets For Every Trade

Have a certain profit target for every trade, so that in advance of when you enter, you have already made the decision when you want to take the profit and close. Do not become greedy and try to stay in there for more and more.

In the same way, if it turns bad, do not attempt to hang on in the hope that the price will reverse back in your favor. Cut your losses and exit. Using stop losses to do this on autopilot is a very prudent strategy.

4. Don't Bet Entirely On Your Own Judgment

Why not? Because quite probably you are not neutral. Let the specialists support you, but always make your own analysis. The best way is using forex signals. There are many forex signal providers available online, but quite a few of them are scammers. Always look at the past performance, as only accurate forex signals will earn you profit, not the losers!

Those are the first four most important rules of forex trading: the principles that can help you construct profitable currency trading systems.

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