In recent years, an ever-increasing number of entrepreneurs have turned to the currency markets to supplement their incomes. Despite positive steps towards economic recovery, the financial environment has remained a challenge, and the foreign exchange has ever been the working man’s friend. Flexible and often lucrative, it can be fit easily around existing commitments, offering sorely needed materials gains that can be earned outside of your day job.
However, forex is a complicated art, and success lies as much in learning to minimise losses as it does in turning a profit. The aim of the game is to keep your account in the black, and this means mastering how to conserve the gains that you make. Here are three top tips to help you out…
Tip One: Choose a Suitable Broker
The first step in creating a successful forex strategy is selecting the right broker. There are multiple packages to choose from, each of them catering to different levels of skill and experience, and it’s imperative to find one that suits you. For inexperienced or novice investors, this means avoiding execution-only packets, and turning instead to the safer waters of advisory and discretionary services. With talented hands such as OANDA’s to guide you, your chances of making a loss are significantly reduced.
Tip Two: Be Sensible
In truth, one of the simplest ways to minimise your losses is by using some common sense. If your account is worth £10,000, then you know that no trade, however potentially profitable, is worth staking every penny of your fortune on. If prospects are good, and you’re feeling confident, then trade £1,000, or even £1,500. The golden rule is this: never place more than 15 per cent on a single action. This way, even if you lose it all, your losses are recoverable; losing upwards of this amount may not be quite as easy to claw your way back from.
Tip Three: Learn from Your Mistakes
Our third and final tip is this: learn from your mistakes. However talented a trader you are, loss is an inevitability. There will always be trades that don’t pay off, but rather than despairing, use them as a learning experience. When things go wrong, take the time to analyse where you made a mistake, and what warning signs you failed to heed. Once you know what not to do, it becomes far easier to avoid those errors that will cost you.
Forex trading – just like any other lucrative investing vehicles – can be risky if you are not careful. Be sure you follow the three tips outlined above in order to better-manage your trading risks.