Many people are lured into investing in the forex trading industry because of the allegedly huge amount of sure money you can earn from here. But the truth is, many people lose their money in the forex market. In fact, 97% of traders lose money daily. Below are useful tips on how you can prevent losing your hard-earned money in the forex trading market:
1. Be aware that losing is always present in the forex
Losing may be hard to accept but here in the forex trading, losing is very normal. Being overconfident wouldn’t help you because this would mean that you are afraid of losing. Before entering the forex trading industry, it is very important to prepare yourself, not only financially and mentally but psychologically as well. Know how to deal with losing and how to control your emotions. Although there are analytical and technical data upon which you can base your decisions, trading in the forex is still a game of chance. Similarly winning in a simultaneous row is considered as “good luck”.
2. Manage your losses by not impulsively increasing your lot size
Although it is tempting to trade a higher lot size after losing, it is always best to cut your losses. Accept that you have lost a trade and start a new. Do not increase your lot size as the forex market is very volatile which means that anything can happen at any time. Save your money for your next trade.
3. Inform your broker ahead of time when you are to close a losing trade
Generally, live accounts are being handled by brokers in-charge. If you realize that you are indeed losing a trade, instruct them to automatically put your account to a stop loss position. This will prevent your account going negative and will save you from additional debts. The best brokers would normally alert you regarding your account status.
4. Be cautious in making a trade
When trading, it wouldn’t hurt if you go with the flow. If you’re inexperienced trader, then start off by just trading along with the popular trends. Know when to enter into and exit trading when a market changes considerably.
5. Do not let your emotions take control
Like what I have mentioned earlier, you have to learn how to control your emotions. Keep your emotions aside. When you lose, you lose – that’s it. You can’t do anything about it. Instead of whining, you can take your losing experience and turn them into a lesson which you can adapt in order to increase your chances of winning your next trade.