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Safe way of trading currencies
Written by: PaxForex analytics dept - Thursday, 17 December 2015 0 comments
The global forex market boasts around $5 trillion in average daily trading volume, making it the largest financial market in the world. Forex’s popularity entices traders of all levels, from greenhorns just learning about the financial markets to well-seasoned professionals. Because it is so easy to trade forex - with round-the-clock sessions, access to significant leverage and relatively low costs - it is also very easy to lose money trading forex.
Just because forex is easy to get into doesn't mean that due diligence can be avoided. Learning about forex is integral to a trader's success in the forex market. While the majority of learning comes from live trading and experience, a trader should learn everything possible about the forex market, including the geopolitical and economic factors that affect a trader's preferred currencies. Homework is an ongoing effort as traders need to be prepared to adapt to changing market conditions, regulations and world events.
Having a good risk management is one of the key tools which can help you to trade in a safer way. It is recommended that each trade uses no more than 2% of investable capital. This ensures that bad trades do not wipe out
the capital base. By keeping each trade to just 2% of capital, an account would need to lose 50 times to lose everything. This reduces the capital sum deployed for each trade, but ensures that an account would never run down to zero.
Forex trading is indeed a safe investment for those who are willing to understand the market. Please bear in mind that there are no shortcuts to make money. If you procure something like that then it is purely beginners luck. There are umpteen examples where people have made themselves millionaires trading in the currency market. On the other hand, there are numerous instances where the majority has lost their hard-earned savings due to inexperience or carelessness.
The worldwide forex market is attractive to many traders because of its low account requirements, round-the-clock trading and access to high amounts of leverage. When approached as a business, forex trading can be profitable and rewarding. In summary, traders can avoid losing money in forex and trade safely by: Being well-prepared, having the patience and discipline to study and research, applying sound money management techniques, approaching trading activity as a business.