How to avoid losing money in Forex market

How to avoid losing money in Forex market: 11 ways

This article provides 11 ways in which traders can avoid losing money in the competitive Forex currency market. The global market of Forex account with more than 4.3 billion in average daily turnover, so it is the largest financial market in the world. The popularity of Forex attracts traders of all levels, from newbies who are just learning about financial markets to experienced professionals.

Since it is so easy to start trading in foreign currency, with 24-hour sessions, access to significant leverage and relatively low costs, is also very easy to lose money in Forex trading.

How to avoid losing money in Forex: 11ways

1. Investigate and learn a little before you start

Just because Forex is easy to get doesn't mean it should be avoided to make a thorough investigation. Learn about the currencies is integral to the success of a trader in the currency markets. While most of the knowledge acquired in live and practice, a trader must learn everything possible about the foreign exchange markets, including geopolitical and economic factors affecting the favorite coins from a dealer. It is making a continuous effort since marketers must be prepared to adapt to the changing conditions of the market, regulations and world events. Part of this process of research involves the development of a business plan.

2. Take the time to find a reputable broker

The forex industry has much less supervision than other markets, so it is possible to finish doing business with a broker of currency less than reputation. Due to concerns about the safety of deposits and the general integrity of a broker, currency traders must only open an account with a company that is a member of the National Association of futures (NFA) and is registered in the Futures Trading Commission of goods of the United States (CFTC) as a Futures Commission Merchant. Each country outside of the United States has its own regulatory body with which legitimate currency brokers must be registered.

Traders should also investigate each Corridor of the account offerings, including amounts of leverage, commissions and spreads, initial deposits and the policies of funds and withdrawals of accounts. A service representative helpful customer must have this information and be able to answer any questions regarding the policies and services of the company.

3. Use a practice account

Almost all trading platforms come with a practice account, sometimes called an account simulated or demo account. These accounts allow merchants to place hypothetical operations without a funded account. Perhaps the most important benefit of a practice account is allowing a merchant to become expert in techniques of order intake.

Few things are as damaging to a business account (and the confidence of a merchant) as pushing the wrong button to open or exit a position. It is not uncommon, for example, for a new trader accidentally add to a losing position instead of closing the trade. Multiple errors in the entry of orders can lead to bad operations and experience large losses. Apart from the devastating financial consequences, this situation is incredibly stressful. Practice makes perfect: experiment with entries in order before placing real money.

4. Use an effective Forex robot

A Forex robot trading is a piece of software for Forex trading that automates business decisions. The most popular robots for traders to the retail are built around the Metatrader platform. These robots are executed at MetaTrader as "expert advisors" and can do anything from give a signal to place a position up to place and manage your trading automatically.

If you have a strategy of Forex which is strictly mechanical and does not require a human being involved in the decision-making process, you can program your Forex robot to make the trading for you 24 hours a day.

5. When it happens to use an account live, invest little money

Once a trader has done their homework, spent time with a practice account and have a trading plan in place, it may be time to go live, i.e. start to trading with real money. Invest money in small amounts will prevent you lost. No amount of trade practice can accurately simulate real trade, and as such, it is vital to start with little to go live.

Factors such as emotions and sliding cannot be fully understood and accounted for until you trade live. In addition, a business plan that served as champion on the results of back testing or trade practice could, in fact, fail miserably as it applies to a market live. Starting with little money, a merchant can evaluate their plan of trade and the emotions, and gain more practice and precision in the execution of entries of orders without risking the whole trade in the process account.

6. Keep clean graphics

Once a currency trader has opened an account, it can be tempting to leverage all the tools of technical analysis trading platform, offering. While many of these indicators are well adapted to the currency markets, it is important to remember to keep minimum analysis techniques to be effective. The use of the same types of indicators, such as two indicators of volatility or two oscillators, for example, may be redundant and can even give opposite signs. This should be avoided.

Any analysis technique which is not regularly used to improve business performance must be removed from the table. In addition to the tools that are applied to the chart, overall the workspace should be considered. Colors, fonts and types of bars chosen prices (line, candle bar, bar distribution, etc.) should create a chart easy to read and interpret allow merchant to respond more effectively to changing market conditions.

7. Protect your trading account

While there is much focus on making money in Forex trading, it is important to learn how to avoid losing money. Proper money management techniques are an integral part of the success of the dealer. Many veteran traders would agree that one can get into a position at any price and still make money, what we really want is as one step out in the trading.

Part of this knows when accepting their losses and continues later. Use protection, i.e. a parador of lost protection. This is an effective way of ensuring that losses continue to be reasonable. Operators may also consider the use of a maximum amount of loss per day beyond which all positions would be closed and new operations would not start until the next negotiating session. While traders must have plans to limit losses, it is equally essential to protect profits. The techniques of money management, as the use of crawl stops, can help preserve gains

8. Use leverage reasonably

Forex trading is unique in the amount of leverage that offers to its participants. One of the reasons forex is so appealing is that traders have the opportunity to potentially make large sums with a very small investment, sometimes as little as $50. Used properly, leverage provides much growth potential; however, leverage can easily amplify losses. A trader can control the amount of leverage used on the basis of the size of the position in the balance of the account. For example, if a trader has $10,000 in an account of currency, a position $100,000 (standard lot) would use 10: 1 leverage. While the dealer could open a position much larger than if he or she maximized leverage, a smaller position will limit the risk.

9. Keep good records

A journal of Commerce is an effective way to learn from losses and success in Forex trading. Keep a record of the commercial activity that contains dates, instruments, gains, losses and, perhaps most importantly, the merchant's own performance, and emotions can be incredibly beneficial to grow as a successful trader. When you are reviewed periodically, a trade journal provides important feedback that makes learning possible. Einstein said that "the meaning of madness is doing the same over and over again and expect different results." Without a trade journal and a good record-keeping, is likely that traders continue to commit the same mistakes, minimizing their chances of becoming profitable and successful traders.

10. Understand the tax implications

It is important to understand the tax implications and the treatment of currency trading activity to be prepared at the time of paying taxes. Consult with a qualified accountant or tax specialist can help you avoid surprises when it comes time to pay them, and can help people to take advantage of the various tax laws. Since tax laws change regularly, it is prudent to develop a relationship with a reliable professional who can guide you and manage all matters related to taxes.

11. Try to trading as a business

It is essential to treat Forex trading as a business, and remember that the individual victories and losses don't matter in the short term; it is the way in which business is done over time is important. Therefore, traders should try to prevent reach feel overly emotional, whether it's with wins or losses, and treat each session of trading as a day more in the office. As with any business, Forex trading incurs expenses, losses, tax, risk and uncertainty. In addition, as well as small companies rarely become the overnight success. Plan, set realistic goals, stay organized and learns from successes and failures will help to ensure a long and successful career as a Forex trader.

Conclusion:

Worldwide currency market is attractive for many traders due to their minimal requirements of home, like to start with very little money, benefits and the fact that the trade is open 24 hours and access to large amounts of leverage. When addressed as a business, Forex trading can be profitable and rewarding. In short, retailers can avoid losing money in Forex if you are well prepared, have patience and discipline for study and research and apply money management techniques.