Forex is risky, but you can still Profit.

Forex is risky, but you can still Profit.

Forex

The term FOREX means foreign exchange. Forex is a global market where you buy and sell currencies from different countries in the world. The foreign exchange has been established every since the 70s. It’s considered to be a free trade because there are not outside control. Everyone is welcome to compete in the exchange. Back in the day the forex was only for high class. You had to be wealthy to be able to trade forex, but today it does not required much to start. The only way to trade was at the world trade center ; with the booming of internet, you can even trade in your bedroom with your pajamas on. On the other side the foreign exchange market can be risky, but you can still profit with the right approach. Let’s find out how to profit despite the risky market that is forex.

 The risks involved in FOREX trading 

There are so many risks involved in forex trading like any others type of business:

1-Ignorance

Many people want to become investors without the proper knowledge and they make all kind of investing mistakes. They buy when it’s time to sell and sell them it’s time to buy. You can’t do much if you lack the available knowledge. You are gambling pretty much! so make sure to learn Forex before jumping on it. For sure you will not be a pro when you start, but at least you will know what you’re doing. That should give you a head start to become a pro.

2-Leverage

Leverage is power. This mean leverage in forex give you the power to invest big with a small capital. That is a good thing because you can make a lot of money in a short time period, but the problem is if used improperly will set yourself to disaster. This is another point that has to do with what you know. The lack of knowledge make you believe that because you have a high leverage, you can double your account size overnight. Leverage is like a credit your broker offers you. Be careful! if you lose it you will owned him money and he has the right to charge your bank account to cover that.

3-Volatility

The foreign exchange market is really volatile. It’s a trillion dollars daily exchange. In period of volatility a lot of investors lose money at a high rate. You have to be careful when it happens as you can lose all your capital in a single transaction. Again your knowledge should tell you when the market become volatile and help you use a proper capital management.

4- Poor capital Management

Unexperienced investors have a poor capital management, because they think forex will make them rich overnight, they are trying to double even triple the initial investment in a month. To be honest anything is possible, but why to take that much risk ? there is really no point. What are your chance to triple your money overnight without getting wiped out? it’s zero to nothing. You have to treat it like a serious business, not a gambling competition. This is not a get rich quick scheme. That’s why 95% of traders lose money!

You can profit in Forex despite the risk associated

The foreign exchange is risky like anything else, but there are steps to take to avoid it

5- Learning

You have to take time to learn to trade. There are many books that will teach you how to trade like a pro. You can go to amazon and look for them. They are thousand available. Also some website will teach you how to trade for free. You can check this link right here. As you leaning, you can open a demo account to multiple brokers to text your learning.

6- Your strategy

This is one of the reason people lose money, because the lack of right strategy. As you learning, you will be able to naturally develop a strategy that best fit you. You can text it on a demo account and perform it as your convenience. I don’t recommend to change strategies often. If you have a strategy that you believe works well, you have to keep it. It will help you master the market faster.

7- Capital Management

This is the main reason people lose money in forex trading. If you lack capital management you will not survive longer. Treat the forex market as a marathon, not a race. It’s about surviving for another day, month or even year. Don’t never trade more than 5% of your capital. Never execute a trade without stop loss. Sometime when the market is turning against you, you have to close your trade. In volatility it’s not worth to ride a trend that goes against you. I don’t even recommend to trade in period of high volatility unless you are a professional.

8- Discipline

Another reason that make 95% of trader lose money is lack of discipline. You have to set yourself a goal that you need to follow no matter what. If your goals is to have 5 trades for the day, don’t you go over, even if you lose money. You need to understand even the pro lose money. Tomorrow is another day, so be patient and control your tamper. If you try to overtrade because lost, it usually associated with emotion. When opening a trade with emotion involved, there is a high chance of losing again.

9- Emotional control

The first question you have to ask yourself is what type of trader are you. The answer to that question will help you control your emotion better when trading in the market. You can find out more about it Here . If you feel that you are getting emotional while trading you should close your computer and take a break for a day. Sometime you have to relax. You don’t have to open a trade because your emotion is pushing you too. Learn to control your emotions. If there are no opportunities there is no reason to open a trade trying to get the money you lost. Tomorrow is another day ! You can lose your money all of a sudden because you are getting emotional. Put this in your head that it’s a part of the game to lose couple of trade, you can’t win all trades. Some days will be good, some others will be bad, the goal is a long term growth, don’t you forget that.

 

2 Replies to “Forex is risky, but you can still Profit.”

  1. Hello ,

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    Regards
    Wiki

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