5 Ways to Stay in the Game While Trading Forex
The global forex market attracts traders from all walks of life from all over the globe. Since it is the largest financial trading market in the world, it provides money-making opportunities to newbies and well-seasoned traders.
Many forex traders enter the market because of the low entry costs and the fact that the market stays open round the clock. However, most traders leave soon because they suffer losses. Therefore, we are going to suggest five ways in which you can avoid losses and stay in the game while trading forex.
Homework Is Essential
People think that since getting into forex trading is easy, they can afford to ignore due diligence. They do not realize that forex knowledge is the key aspect of successful trading.
Even though the major part of learning comes from the experience of live trading, a trader must know about everything related to the forex market, especially the geological and political aspects that affect the currencies. Forex traders should therefore use practice accounts before they start live trading. Some of the things to learn from practice accounts are:
- Techniques of analysis
- Money management procedures
- Control leverage amount
- Maintain a trading journal
- Treat forex trading as a business
- Understand the tax implications
- Formulate a trading plan
Find a Reputable Forex Broker
As with any financial industry, forex trading has its share of fraudulent brokers. Therefore, make sure that you start your trading with a reliable and honest forex broker. Look for a broker that provides a 100% deposit bonus when you trade with them. They should provide you with trading tools that are convenient to use.
As with any financial industry, forex trading has its share of fraudulent brokers.
There must be transparency about the commissions, and you should be able to make the withdrawals in any currency of your preference. International Financial Services Commission (IFSC) monitors the forex broker's operations to ensure that they follow the legislation and framework of regulations. That means it is safe and reliable to trade with a broker that abides by the IFSC rules.
Keep Your Charts Clean
You might feel tempted to use several of the analytical tools offered by forex trading platforms. Even though most of them are meant to provide you insights into the forex market, using too many of them can clutter your charts and confuse you.
Therefore, use one tool for each analysis, like a volatility indicator or an oscillator. Using multiple tools for the same indications can offer opposing suggestions and become counterproductive.
Remove any analysis techniques or tools that you do not use regularly. Pay attention to how the charts and the dashboard look when you select the tools. Use contrasting elements that are easy to interpret so that it becomes easy for you to work. It will also enable you to respond appropriately to changing market scenarios.
Keep Your Trading Account Safe
Most people concentrate on making profits while trading forex. However, it is also equally important to mitigate losses. Most experienced traders would tell you that you can enter at any price position and make some money. But what matters the most is to know when to get out of a trade before you start losing money.
Many people make the mistake of holding on to a losing trade in the hope of making up for their losses. However, you may end up losing more money than you had originally imagined. That is why you must set a limit to which you can handle the losses before you get out of the trade.
You can also select a limit to the maximum loss you can endure in a day, beyond which there will be no further trading for your account until you choose to initiate it again.
Treat Your Trading Like a Business
When you start live trading, treat it like you would treat a business. Start with small amounts and build up your profits. Don't get tempted by lucrative trades and end up investing a lot in the early days of trading. You would not be able to anticipate the slippage accurately all the time, so play it safe. These are some suggestions to keep in mind while trading.
- Start with small amounts and build up gradually
- Control the amount of leverage
- Maintain the records of your trading every day
- Keep your emotions of losing and winning away from trading
- Know how to treat your trading for tax implications
The forex trading market looks lucrative to many people because they can start small, the market stays open round the clock, and they can get good leverage. But forex trading must be approached like a business with proper due diligence, practice, and precautions.
Choose a reliable forex broker to avoid legal hassles and avoid losses. You must also use efficient money management methods and clean charts to stay in the game and make profits.