The basis of any successful trading on any financial market is a system of risk management and a good trader’s strategy. But there are other methods which can help you to cut your losses and increase your income on the currency market.
Today the forex market is the most popular market with a huge turnover of around 7 trillion dollars per day. Apart from the fast earning potential, it is also the riskiest of all financial markets.
10 ways to avoid losing money on Forex:
1)Own the material that will help you understand the trading processes.
Forex market is like the ocean, if you swim in it without any knowledge – it’s like crossing the Atlantic in an inflatable boat. You have to know both technical and individual analysis, be able to determine the price trend. There is enough information on the Internet for you to have an understanding of the processes and some basic information. Before you open a position, you should study current economic news.
2) Select a reliable broker.
Choosing a broker will make trading and withdrawing money easier for you. There are a lot of fake and real brokerages on this market, so make sure that the company has been on the market for over 3 years and has a Level 1 regulator at least. This will guarantee you at least receive honest quotes, and at most, quickly withdraw profits.
3) Before you trade on a real account, try out your strategies on demo accounts.
Here everything is like in sports, if you enter the competition without preparation, only a miracle will save you from a defeat. Almost every broker has a demo account. It is an account on which all real quotes are displayed, but trading is done with virtual money. So, before you go into battle – test your skills and strategies in conditions, as close to the trading conditions as possible.
4) Do not invent additional tools. Take the simple way.
Suppose that you want to work with a lot of complex instruments, but it will only complicate the process of trade. Excessive loading of indicators on the screen will distract you, it is quite possible that it will lead to the fact that you simply will not have time to close or open another trade in time. Post-view templates will help in making informed trading decisions.
5) Reduce risk by using the right tools.
It’s right to reassure yourself and use tools to control risk, such as a stop loss or trailing stop. This is not a guarantee of protection against market slippage, but it still saves you money if the trend shifts sharply. Find other ways to minimize your risks, recheck your trading strategy, because no tool will bring you profit without it.
6) Don’t give in to emotions.
Emotions are on the side of the loser. You should only stick to the facts, you can’t use intuition or assumptions in trading. Even if a series of trades are negative, do not panic, stay calm. This is the only way to guard against risk and loss.
7) Carefully choose the size of your leverage
It is worth taking care of the size of leverage before you open a trading account. Leverage can help you enter a large trade with a small amount of capital, it will increase your profits many times over, but you should not forget about the flip side of the coin. Since the currency market is highly volatile, the risks are high. For starters, try to avoid leverage greater than 1:100.
8) Analyze your trading efficiency
You can’t correct your mistake if you don’t understand the reason why it happened. To that end, analyze each of your negative trades. Keep records of currency pairs, keep statistics. In any case, you cannot avoid mistakes, the main goal is to avoid their repetition.
9) You must understand that trading Forex is a business.
Forex will give you the illusion of fast earnings in the short term, but it is necessary to set financial goals so that the market will bring you income all the way. So, don’t treat it like a game of chance – this way you will not get anywhere, except for a zero balance. Calculate profits, losses, costs. Plan your budget carefully, and be prepared to lose.
10) Have no illusions concerning quick profits.
Forex is a business. It takes time, knowledge, and money to make a stable income on an unstable market. Always invest exactly the amount you do not regret to lose. You should not expect super profits, or that you will become a millionaire in one month.
The currency pairs market is a volatile market in which you can make money if you approach it with a full understanding that this is not a game but a business, constantly studying the material, watching the news, analyzing both victories and defeats. The precautions written in this material will not be a guarantee of success without your strategy. You should always look for ways to improve it, to develop your skills.