How to trade Forex Successfully and Avoid Losing Money in Forex
Almost 96% of all traders in the Financial Markets lose money. This is an extremely high percentage of traders that lose money and most of them quit before they actually give themselves a real shot at making it in Forex. This is the main reason why this article is written so that we want you (if you are new trader) to be prepared and take this new path in Forex trading seriously. No… please do not try. Commit yourself to making this a successful journey and you will do just fine. However, if you enter into this arena without proper preparation, you are likely to be one of the casualty in the 96% of trader who fail and lose money in Forex. So, here are 10 ways to avoid losing money in Forex…
How to trade Forex Successfully and Avoid Losing Money in Forex
Get the proper trading education before diving in…
Too often, many new traders get excited with the prospect of making fast money by pressing a few buttons that they think that it’s really easy to make money by just pressing the buy and sell button on their computer. Well, the truth is making money in Forex is not difficult but it’s also not as easy as many of the new traders may think. Trading is a specialized skill that requires education and practise. Without the proper education and training, a new trader is like a new driver jumping behind the wheel and expecting to be able to handle a car. Well, get the right training. Attend the right course before going live. This will save you plenty of heartache and is one key way to avoid losing money in Forex. If you would like to learn how to trade the right way, we have just the course for you. We call this trading course, the Ultimate Professional Trading Course and we have priced it at a price so ridiculous that getting the proper trading education is no longer a price matter.
Your Broker is Your Partner – Get a Good Partner
In any business, you will have business partners – be it your supplier or your key customers. However, when it comes to the trading business, you do not have many partners as traders. One partner that you need to rely on is your Broker. Without a Forex Broker, you cannot execute your trade. So be sure to choose a partner that is reliable, honest, and executes to your instructions fast. You may have seen in our other blog posts on brokers… we recommend 2 brokers. We use them and we suggest that you check them out – XM Broker and Tickmill.com. So far we have used them and withdrawals have been easy. What’s the point if you made money only to find out that you cannot withdraw your hard earned profit? If you want to avoid losing money in Forex, one important thing is to use a reliable broker. And that we have made our suggestion.
Practise, Practise and Practise
Most new traders go out and start trading using live accounts or real money. Making money is something exciting but remember this… trading is a life long skills that takes time to develop. You won’t be an excellent trader overnight. Give yourself time to be good at trading. Unfortunately, most new traders blow up their account before they even get started. Practice new strategies on demo accounts. The market will always be there… so there’s no rush at all. Open your demo accounts here – XM Broker and Tickmill.com.
Keep Trading Simple
Another way to avoid losing money in Forex is to know that effective trading should really be kept simple. Too often we see traders going after the next shiny object. They hope from one strategy to another strategy. They buy all sorts of Forex indicators which are usually expensive and complicated to use. The right way is to find a strategy that fits you and practice until you are so good at the strategy that you don’t need to rely on MT4 indicators that we created by Forex Marketers instead of Forex Traders. Keep your MT4 charts clean and simple. We have plenty of Free Advanced Forex Strategies on our site here that is enough to help you make decent profit.
Make Capital Protection Your Top Priority
Most traders start their trading career on the wrong footing. Most of them think about making money fast. But in actual fact, the most important thing for them to start thinking is how NOT to lose money. This is very important if you want to avoid losing money in Forex. If your focus is to make money in Forex without actually thinking how you cannot lose money, then eventually you will blow up your account. Please take time to think how you can avoid losing money first and that has to do with capital protection. Think of your exit plan. Your stop loss level before entering into any new position or when evaluating a new trading strategy. If you can start to think about capital preservation first before you think about how to make money… that’s a HUGE step forward in your trading career. After all, if you cannot lose… then you can be in the game for a long time even if you are not making money.
6. Trade with Small Quantity and Grow Slowly
Once you are comfortable that your strategy is profitable… it’s time to go live. However, do know that live trading and demo trading has one big significance. Although everything looks the same, one big difference is psychology. You see… when you trade with demo account, you might be more emotionally detached because money is not real. You are less affected. Although it might seem the same when it comes to real trading… it’s not. We know that for a fact that most people might feel more nervous when it comes to real money. And that’s normal. So it’s best to start with smaller quantities and slow scale up. We strongly recommend growing your portfolio slowly. Only use 0.01 per every $100 that you have in your account. In our own portfolio, Profit By Friday EURUSD, we grow this portfolio by first depositing $1000 into the account. And our trading starts with 0.10 lot per position. Then every week, we deposit $200 into this portfolio. As week goes, our portfolio grows and our lot size becomes bigger and bigger and we do this gradually. This way we won’t have a “sudden shock” of trading too heavy too fast which might get us nervous. If you would like to see our detailed history on Profit By Friday EURUSD on how we grow a brand new portfolio slowly, then click here to look at our verified account with MyFXBook.
Make Sure You Do Not Over Leverage
Leverage in any investment vehicle can be extremely useful to amplify your return on investment. However, please take serious note that leverage is a double edge sword. Let’s take an example. If you are buying a property for $100,000. And you make a downpayment of $10,000 and the rest, $90,000, borrowed from the bank. Essentially, your leverage is 1:9. If the property appreciates to $150,000. Then your profit is $50,000 and your Return on Investment is a cool 500%. However, if the price drops to $90,000, then you have lost your $10,000. In Real Estate, it’s all cool as the banks won’t withdraw your loan but if this happens in the Stock Market or in Forex, you will get a margin call and will have to force sell.
So while it’s attractive to have high leverage of 1:1000… please don’t fall into this trap. When we trade, we only trade with leverage of 1:100 at most and that is actually very high leverage. Think about it…do you get such leverage with Real Estate or from the banks for any kind of loans? Be safe. Be prudent. Stick to 1:100. In this case, lower leverage is better.
8. Keep Track of Your Trading Performance
Just like running a business, it’s important, especially when you are new, that you keep a good record of why you enter and exit your trades. The reason for this is so that you can replicate your actions/decisions over and over again to get the long term desired results as a trader. In your lifetime, you will be making thousands and thousands of trades. It’s never going to be one trade that retires you. So keep track of your trading performance. One easy way to keep track is to use MyFxbook and FXBlue. You can also use Forex Factory Trade Explorer. We use all these services in our own portfolio like Profit By Friday EURUSD.
The Forex Trading Business – Are you treating like a business?
Forex trading is a business. Like it or not, although it does not have a shop front, it’s a business because it involves money… YOUR money. Most traders treat Forex as a way to generate fast money. In some ways, you might be able to generate some cash in just a matter of a few hours. But this is not the right way or right mindset to approach Forex trading. If you fail to think of it like a real business, then you are already almost doomed to fail.
Like any business, the Forex Trading Business like have slow days and sometimes you will have good days. Imagine you are running a cafe on a busy street… somedays are better that other days. But as a business owner, you continue to do the right thing regardless its a slow day or good day. You continue to operate your cafe by opening on time and closing when it is time. You continue to track your stocks and you continue to prepare your food and coffee. The same applies to Forex. Sometimes your strategy does not work but you know that in the long run the strategy will work and you continue to trade with the right discipline regardless of the result. Of course, be sure to know that the strategy you use works well in the long run.
If you are still searching for the right strategy, well… we highly recommend our MorningPips Forex Trading System which works very well in the long run. Sure… you might have losing days but in the long run, you will be profitable. Another service that provide is a 100% done for you service, Profit By Friday EURUSD…. we trade for you 100% and even then we cannot guarantee winning trades each time. We only know that as long as we keep to our focus we will be profitable.
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