10 Ways to Avoid Losing Money in Forex
10 Ways to Avoid Losing Money in Forex

10 Ways to Avoid Losing Money in Forex

The forex market, without exception, is the largest market of the financial variety in the world. It is also the market that offers traders and investors alike a great deal of liquidity. The most liquidity of all markets, in fact. Hence, it is the most enticing for traders and investors alike and forex trading in India is making waves. From green thumbs new to trading to financially savvy traders, the forex markets of the world appeal to most investors. 

Due to the fact that market access has become so easy online, with substantial leverage involved, several forex traders enter these markets at a rapid pace, only to face some disappointments. Therefore, to remain steadfast in this volatile and dynamic marketplace, there are some ways to adopt (10, to be precise) to avoid losing your wealth in forex. 

1. Homework First

If you wish to indulge in forex trading in India, it's essential that you work hard to learn about certain aspects of forex trading first. If you think that forex traders have it easy, you are wrong. Although nothing beats live trading sessions to gain knowledge, in order not to lose money fast, you have to learn all about markets of forex, economic factors driving currencies and geographic-political factors influencing currencies. 

2. Make a Plan and Find a Good Broker

The industry that deals with forex is much less regulated than other markets, like stock markets, for example. There is practically no oversight in forex markets, and this makes it more prone to you having engagements with a dubious broker. See that you choose a reputed forex broker, and one that is registered with some regulatory authority. It's a good idea to do research to find out about a broker’s charges, account funding, etc. Also, as part of your initial plan, think of the currencies you wish to trade with and the amount of risk you wish to take. 

3. Simulated Trades

Most currency traders start to enter the forex markets with some practice to back them up. If you can find a good trading platform with a simulated trading account, then you can practice how to trade without losing any money initially. These are hypothetical trades without a trading account that is funded. Once you get the hang of this, you may be ready for real-world forex trading. 

4. Maintain Clean Charts

Once you open a trading account, you may be tempted to use all the tools for technical analysis that your trading platform provides you. These indicators may be matched with forex markets, but you should only use a few for them to have any positive effects on your trading. In case you use multiples of similar indicators, such as two or more indicators of market volatility, your techniques may become redundant, cancelling out each other. 

5. Money Management 

The focus of forex trading in India, and in many parts of the world, is making sums of money. However, you should first learn how to prevent yourself from losing money. There is much to be said about how a trader enters a trading position, but your target should be to find out how to get out of a trade fruitfully. Therefore, it is always required that you use a stop-loss tactic. You should protect your present gains and avoid further losses. 

6. Begin Small

Growth, to be sustainable, in any sphere of life, should be gradual, and so it is with trading. When you go live with your trades, you should begin with small amounts of money. Once you see yourself making gains, you can gradually increase investments. 

7. Leverage Use

Forex traders have an incredible amount of leverage when they trade, more than is available in other asset markets. A major reason that forex  traders enter these markets is because large sums of money can be achieved from small investments. The clue to follow to gain profits is to use your leverage in a proper manner. If you start small, you may have minimal leverage, but also cut down your risk. 

8. Record-Keeping - A Must!

You must keep a journal of your losses and wins in trading. Keeping records lets you go back and learn from your mistakes. You need to keep records of dates, profits, losses, and your own emotions, so that you can avoid what leads to loss in the future. 

9. Think of Taxes

You must consider the implications of tax levied on your trading, especially if you make profits. This helps you while filing your tax returns. 

10. Trading is a Business

Leading currency traders will tell you never to let emotions get in the way of trading. Your forex trading is a business activity, and you shouldn’t concentrate on small gains and losses in the short term, but how you perform over time. 

Start In Forex

A good way to diversify your portfolio is by holding many assets as investments. A bag of mixed financial instruments minimises risk, and you can always open a Demat account and venture to Motilal Oswal for trading in forex and exploring other investment products. 

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