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How to avoid losing money in forex


How to avoid losing money in forex


The forex market is a very very complicated environment with some people thinking that is nothing more than gambling, and with this mindset people can be very ill-prepared when it comes to navigating the financial markets.


Despite what might be said by certain people online, it is inevitable that you will lose money at some point whilst trading, and those who claim otherwise are blatantly lying to you.

However, in the following article we will go over some of the points that you can use in order to minimize losses in your trading career.


Do your research

Trading can be one of the most stressful career choices that you could ever take, not only that but it can be one of the most difficult career paths that you could ever take. Taking the time to learn as much as you can about forex trading will seriously out you ahead of a lot of people who feel like they already know enough.

Although a large portion of learning comes from actual live trading experience, there some things that a trader should learn themselves, such as how certain geopolitical and economic factors can shape a currency.

The learning is an ongoing process, which should never have an end goal because these markets are forever changing, and a successful trader needs to be able to adapt when the time is right and remain calm knowing full well that their trading system will still work.


Test on a practice account

Practically all brokerage platforms nowadays will offer some sort of practice or demo account for new traders to practice and refine their trading strategy, so USE IT.

You won’t believe how many new traders jump straight in at the deep end and end blowing their accounts because of their naivety towards the financial markets.

Demo accounts can drastically improve a trader’s edge, as well as their psychology because it can be quite tough pushing that button and executing a trade.


Keep leverage low

Most trading platforms nowadays offer some sort of leveraging towards forex trading, which is one of the many reasons why forex trading has become extremely popular, in that it allows people to take a relatively small account and turn it into a larger account all through the use of leverage.

Although the use of leverage can propel small trading accounts into much larger trading accounts, it can just as easily do the opposite and turn small accounts into much smaller accounts. It is advisable for traders to use extreme precaution when it comes to leverage, because a trader who has $10,000 in an account can use 10:1 leverage and use a $100,000 position.


The bottom line for forex trading is that it is very easy to fall into that trap offered by marketers, where they portray trading as something that can be done by anyone, and for 1 hour a day. In reality it is a lot of extremely hard work that only a select group of people are able to do, so the question is. “Which one are you?”