Success in forex trading is neither an improbability nor impossibility, as many believe. True, beginners suffer losses in the early stages, but experience eventually moulds them into successful forex traders. Statistically speaking, only a small minority of traders overcome their inhibitions and go on to succeed. But that’s because of a sheer lack of perseverance and grit to push on against the tide. Giving up is not an option, surviving is. To survive is to hold on, and to hold on is to eventually record a win. Losses are only the rungs you’ll have to climb to make your way to the top.
The experts at WesternFX share their secrets to controlling losses and maximizing gains. If you want to become a survivor and a winner, then you need to read this.
1. Don’t Jump In Without Knowing How
The initial excitement of making quick bucks out of the market volatility might prompt you into taking a plunge right away. Never let haste drive you. Learn the basics, trade on a demo account first, refine your strategies and only then start forex trading.
2. Devise a Trading Plan
No man can succeed without a plan, as the renowned investor Warren Buffet proved by refusing to deviate from his trading strategy. You need to adopt a strategy, test it out, and if found effective, stick to it at all costs.
3. Trade Less
The lesser the trades you make, the lesser your chances of losses. One might point out that it also implies an equivalent reduction in profits. That’s not the case. Despite making a lower profit, your losses don’t end up eating into it, which still leaves you with a considerable sum of money.
4. Add Stop Loss and Take Profit
Don’t bite more than you can chew. Restrict your losses and set limits to your profits to avoid putting your trading account at risk. Setting stop losses will minimize losses, while take profit orders will help you make an exit with a sizeable profit without letting greed take over.
5. Keep it Simple
Overcomplicating your strategies by reading too much into charts and indicators will only prove detrimental to one’s trading performance. Simple is always better, and as a forex trader, one must learn to eliminate the excess and trade with a simple approach.
6. Avoid Margin Trading Initially
Margin trading involves entering into positions that are larger than your account through leverage. While using leverage can amplify the profits, they can equally amplify losses. Beginners must either completely avoid it or trade with minimum leverage, and build it up as they gather experience.
7. Be Wary Of Spread Fluctuations
Exchange rates in forex trading are prone to fluctuations. They are likely to widen when the market closes or when there are external events or important economic announcements made. Watch out for the fluctuations and keep an eye on the news if you want to avoid losses due to spread variations.
Want to know more such secrets? Open an account with us and ask our experts for guidance.