The global Forex market has attracted millions of individuals from diverse backgrounds to start trading, and it’s clear why. Not only is the Forex market the most lucrative financial market, but it’s also open 24 hours a day, 5 days a week, making it highly accessible to traders from all over the world. In addition, high-leverage is a common feature offered by Forex brokers. When paired with low commissions and fees, high leverage provides much more opportunities for traders to profit, without necessarily depositing large quantities of currencies in their trading account.
Given that trading is a skill that is sharpened through experience, many traders might be wondering whether Forex trading is worth pursuing in the long-term. Of course, there are a few tricks that traders can follow, to help set themselves up for success.
If the world of Forex is a theme park, it’s up to traders to choose which roller coaster to ride – will you go for the smooth-sailing teacups, or the fastest one with the most dips and loops? Both newcomers and seasoned traders can practice these following tips to help them avoid losing money on Forex trading and make their experience much smoother:
Interpreting Forex News
Starting with a crucial point for both beginner and advanced traders – never forget that most big market moves occur during the news cycle’s peak hours. As you become more experienced, traders might focus most of their energy on technical analysis – ie. looking at historical price action. But current events have a huge impact on markets, so learning how to interpret Forex news correctly will help you minimise your losses.
Having said that, technical conditions should not be ignored either. Traders will do well to learn how to identify when a market is over-extended long or over-extended short to determine when spikes may occur.
Set out with a Plan
A successful trader always has a goal in mind. Their desired profits are always clear, and so is the amount of money they are ready to lose should the market move against their prediction. Without a plan, traders are more likely to lose and quit the game before they’ve properly begun. Keep a record of your plan and ensure you adjust it according to the ever-changing markets.
Watch your Leverage
Every trader loves leverage, but don’t get carried away. You should always be aware of the value of your leveraged trade and manage your risks accordingly. Leverage creates the opportunity to generate large profits from very low investment. To learn how to use leverage for your growth, you can start trading using a Demo Account before going live. This will help you practice trading, while also familiarising yourself with how leveraged positions work.
Don’t Overtrade, Don’t Undertrade!
Overtrading is a symptom of an emotional trader. Often, emotions such as anxiety and excitement may cause traders to open and close positions too early, thereby losing out on potential profits and experiencing losses instead.
With time, education and practice, traders can become more confident in their positions, holding them open until they turn profitable. On the other hand, under trading may prove counterproductive as traders will lose out on a myriad of opportunities!
Use Stop Losses to your Advantage
Stop-losses are an effective tool to minimise losses, but traders should use these wisely. A stop-loss order will automatically close a trade once it reaches a level set by the trader. The trader will set this limit as they are not willing to lose any more funds than the stated amount, so they will exit the trade once the price falls below that amount.
Be reasonable when using stop-loss limits by allowing your trades enough time and space to develop, especially when markets are experiencing high degrees of volatility. It’s highly possible that trades can turn in your favour, resulting in a losing trade becoming your most profitable one if you stick around!
Most Forex Traders take time to learn the fundamentals of trading and may experience losses when starting out. Others may find some luck at the beginning of their career, only to lose their confidence later on. With these tips and tricks, traders can limit their losses, no matter their level of experience.
Start trading with a low minimum deposit, or practise via a free Demo Account. Traders can access over 160 assets with leverage up to 1:500 at LonghornFX.
Disclaimer: The content of this article is sponsored by LonghornFX. Opinions are personal to the author and do not reflect the opinions of LeapRate.
