Avoiding Losses in FX Trading
Are you constantly losing FX trades? Yeah, money can drain away real quick if you don’t know what you’re doing. When it comes to avoiding losses in FX trading, you need to follow the tips we have outlined above.
Avoiding Losses – Don’t Overtrade
One of the biggest mistakes you could make in Forex trading is to overtrade. If you as a newbie want to avoid losses, you need to stop overtrading. For one, this means that you need to stop placing too many trades at once. The more trades you have open at once, the harder it becomes to keep track of them.
In FX trading, to be profitable, you need to keep track of open trades, so in case there are developments, you can react quickly and appropriately. However, if you have way too many trades open at the same time, keeping track of them all becomes very hard. Having too many open positions can make it nearly impossible to monitor them all, and this then leads to losses.
Therefore, stop overtrading. You may want to limit open positions to no more than 2 or 3 at once. Any more than that, and things start becoming complicated and confusing. Once you gain some experience and your reflexes improve, you can start having more open trades simultaneously.
Avoiding Losses – Stop News Trading
If you plan on avoiding losses, but have been suffering big downfalls over and over again, something you need to avoid doing is trading the news. Yes, news trading in Forex can be very profitable and successful. After all, major news developments can have big impacts on the values of various currencies. Knowing how news affects currencies is a big bonus in FX trading, and it helps distinguish the pros from the newbies.
However, as a newbie, trading the news is not recommended in the least. News trading is much easier said than done. You need to know how to read the news, how to interpret it, and how those interpretations translate to your daily trading strategy. This takes a good deal of experience to be able to execute successfully, and therefore trading news is best avoided until later on down the road.
Don’t Overcomplicate Things
If you are new to the world of Forex trading, and you want to avoid losses as much as possible, something you need to stop doing is overcomplicating things. Yes, there are some really complicated trading strategies out there, ones which take a long time to master.
You may also be trying to use too many indicators or combinations of strategies at once. Sure, the complicated trading strategies are often very reliable when properly executed, but of course, proper execution is key.
If you are new to FX trading, to avoid losses, you need to try and keep things simple. Learn a couple of strategies and the most important aspects of Forex trading, and then go from there. There is no sense in making things more complicated than they need to be, a good lesson that applies to life in general, not just to trading.
Avoiding Losses – Trade Longer Timeframes
When it comes to avoiding losses in FX trading, something else that is highly recommended is to not trade short timeframes. Sure, trading short timeframes can be very profitable. This is how Forex scalpers make all of their money.
However, because trading timeframes are so short, it’s hard to keep track of things, and trades may close before you get a chance to react to developments. Trading short timeframes, such as 5, 15, or even 30 minutes requires a lot of attention.
The amount of attention that needs to be dedicated to trading short timeframes is much higher than for longer timeframes. Longer timeframes give you some leeway and allow for a slower reaction time, thus making the longer timeframes much less stressful to trade.
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Ditch Losing Strategies
Another huge mistake which so many newbies make, something that definitely doesn’t help with avoiding losses, is to keep on trading even in the face of constant losses. This is something that so many trading newbies do, and we really don’t know why.
Repeating the same thing over and over again, all the while expecting different results, is known as clinical insanity. If a certain trading strategy or method is clearly not working for you, then why would you keep using it? It just does not make any sense. If you keep losing trades, you need to stop.
Now, we are not saying that you should stop trading FX forever, just for the time being, until you have managed to revaluate your strategies. If the current strategy you are using is not doing the trick, take a step by, try to figure out exactly what is not working, and then go from there.
Avoiding Losses – Don’t Try to do Everything at Once
The other thing you need to do when you want to avoid losses in Forex trading is to stop trying to do and learn everything at once. If you have ever studied for some sort of exam, you know that trying to cram as much info into your head all at once is impossible.
Sure, you may remember a little something here and there, but in the grand scheme of things, you won’t retain anything useful.
Trying to learn too much at once is a great way to not learn anything at all. If you plan on being a successful Forex trader and avoiding losses, you need to start at square one, you need to master the basics, and then slowly go from there. Remember people, this is not the 100 meter dash, it’s a marathon.
Avoiding Losses in Forex Trading – Final Thoughts
When it comes to avoiding losses in Forex trading, if you manage to follow the tips we have outlined above, you should become much more successful in no time at all. Of course, if you truly want to become a pro FX trader, learning from a school like the Income Mentor Box Day Trading Academy is always recommended.
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