How not to lose my money in Forex?

That's the right type of question every Forex trader should start with.

Here are the rules:

- Start with a mini account and a mini lot

Why? Every beginner Forex trader goes through the first psychological challenge of making first trades. There is a whole mix of emotions, but most importantly there is real money involved, and no one wants to lose real money.
It is very important to leave through your first experience unharmed. You should risk very little at first, this will take off the pressure of making first trades.

Important: with a mini accounts of under $500 you should trade no more than 0.01 lot. Otherwise, there is 95% chance to lose your first account!

- Have a trading system
..Not just any system, but the one which eliminates any misinterpretations and double meanings of entries, exits, stops etc. Avoid systems that call for using intuition or act upon common sense, or use own judgment according to the situation.
The best systems are the ones you make yourself, or, if you start with an adopted method, you should, at least, put an additional work into it.
Polishing a system takes months, but once perfected, it adds tons of confidence into a trade.

- Learn to be break-even on every trade
Ability to protect your starting capital is paramount. Break-even trades are great, since you lose nothing. When you learn how to be break-even, you will be able to make a so called "free trades" - a trade, where a stop loss is set to break-even and a position is allowed to run for maximum profits.

- Trade during active market hours only
Although Forex market is open and can be traded 24 hours a day, the most active market hours are from 3am EST to 5pm EST. Avoid trading during other hours, there isn't much to earn there, but there is plenty of opportunities to make losing trades.

- Avoid trading during news time
Check Forex Economic Calendar and avoid news hours. Try to avoid trading 20 min before the news and 20 min after the news. News trading is one of the riskiest adventure. Always look back at possible losses before admiring possible profits.
Not every Forex broker offers perfect trading conditions during news hours, make sure you know the policy of your broker.

- Don't over trade
Don't trade too much. You won't be able to make more money than Forex market is willing to offer.
Don't compromise your trading system. If a trading setup is not perfect, don't take a trade.

- If you start to lose - stop trading
If you begin to lose, it is better to make a pause. It is either your fault and lack of discipline, or there is a change in the market behavior and your system can no longer produce results. In any case pausing helps.

- Practice, learn, improve
Always continue researching, learning and working on your system rules, your discipline and your risk appetite.

Most importantly: don't think about quitting your day job. It is a very high goal, which may put a pressure on you to start earning money in Forex faster than you would normally do. Take you time, learn, test.

Good points, Yng.

Want add some of my notes:

1) if you are a beginner, don't read too much oppinions and crap from forums, you might pick up bad ideas that'll cost YOUR money. Don't rely on others opinions until/unless you have your own or you won't learn to analyse yourself at all.
Well, I hope this forum is little different, so far we have less quantity but more quality.

2) MM and SL-s.
Find the optimal SL-s to pairs.

* Too tight stops are acc killers - give your trade a room to take a breathe or it can choke. There can be a random noise in the market.

* Too big stops are killers too - there must be a level you addmit you were probably wrong. Don't hope your luck will turn, it might not and you end up married with a bad trade. That's not happy marriage.

Personally I use 18 - 38 pip SL for EU, GU, AU, U/CHF, U/CAD and 28 - 48 pip SL for volatile JPY pairs.

3) Careful with indicators. I think every trader go through phase having 5, 7, 10 or 12 indis in chart (haven't you done it? I have...) and this might lead to watch indicators and look for perfect signals from indicators, not from current price action and market itself. Indicators are there to confirm YOUR thaughts, not to give you them, indi won't pay for losses, you will.

4) Don't do very sudden moves.
If you are an impulssive person, learn to tame yourself at the market. For instance: a) don't jump into trade if you see a spike and don't know what and why is it, you have missed it, wait for a next train. b) being irritated after a loss, don't think "getting even" with market. Think about it - do people act reasonable or say nice things when they are out of emotional balance? No, they don't, they do foolish things.

5) Have a long term plan about your way to success. As Yng said, there must be a system. Keep a track/diary on your trades, analyse them, correct the mistakes and ... don't keep constantly changing the system (and indies) looking for perfect one. You waste your time and money. There ain't one, every system produces a losing trade sometimes. Hey, Warren Buffet and George Soros sometimes lose too! Control your losses through MM and optimal SL-s.

6) Get yourself a favorite currency to learn everything about it but keep in mind, one currency is just half of a pair. Add other pairs during time, when you have find out their correlation and interaction. It's often told EUR/USD first, GBP/USD second and then others - yes, I agree but before going to GU, look up EU's mirror pair, U/CHF.

I like JPY, but it's a beast and very hard to manage. Some day it's very generous, next day you want to jump out of the window. I'm lucky to live on a ground floor.

7) You read quite similar rules from many places I guess. Now, the question is: are you smart enough to learn from those words or you have to go through what most traders do (I did as well) and come to same conclusions after making all expencive mistakes by yourself...
Many of us start as a King of the World Forex and come humble after blowing an acc. Or two. Or even more.

Good advise!