There is no sure way to profit from investing in the forex market mainly because like any other form of investments, there will always be risks involved.
The need to be safe and careful in Forex Trading
If you are not careful enough, you could be facing some unknown danger with your money. However, there are some ways which can help you to trade (or tread) safely into the forex market so that you do not get burnt easily.
Set a limit to your forex trading
You will find that some of the best known secrets in forex trading are to limit not more than a few percentage of your overall portfolio to forex trading. This will ensure that whatever you do, there is a maximum you can go which will limit any risk of loss. This will however, work both ways as it means investing will be limited as well.
Get the right bet size
This ensures that you do not overtrade. It is prone to happen especially if you try to trade a position which is too large than what you have in your account. The rule of thumb is to ensure that you do not put in more than 10% of the balance in your account into a single trade. Some traders become too overwhelmed with a certain movement that they want to put in as much as they can which can backfire.
Use a stop loss order
This will limit your loss through an automatic exit strategy and is very useful when the market become too volatile at a given time. In using this limit, you will not lose more than you have in your account
Putting it together
The 3 ways are put in place to ensure that you do not experience unwanted losses. It must be noted that forex trading do not always end up in losses. Timing and knowledge will make a lot of difference and you need to practice a bit more in order to be good at this. On top of all that, you need to be cautious and wary of where your money is going and not to be too overwhelmed by adrenaline when investing.
What about other safe methods?
Besides that which have been mentioned above (the top 3), you should take into consideration other methods as well. Remembering that the bottom line is to play safe, you need to tread carefully before venturing deeper into your investments, so that you do not dig a hole you cannot get out of. Below are some pointers:
- Always do your homework – Due diligence must be done no matter what. Never take anything for granted. Do your homework before you get burnt
- Find a good broker – In this industry, reputation is very important. Make sure the broker is a registered one with good reviews (especially if you are using robots)
- Practice and practice – You cannot get it right in your first try. But you could minimize the risk by practicing before jumping in
- Use the tools – After you have opened your account, take note of all the functions that come with the platform and use them to analyze your investments
- Start Small – The best thing to do is to start with a small figure and then work your way up. This will give you a good head-start in case you fail the first time (at least your losses are low)
- Be prepared – This means you need to be prepared for the worst while hoping for the best
- Patience – This trait works wonders. There is no short-cut to success. You need to learn by experience. So, take your time (not too long) and you will get there