5 Ways To Lose Money At Forex Trading
Forex is a popular way to make money online, but it is also a mirky area to those who don’t know what they are doing, and as sure as there is money to be made, there is money to be lost too. In fact, in reality the best way to make money on Forex is simply to stop losing it. Here are 5 things to avoid doing as you are learning the ropes:
Relying On Machines
There are plenty of machines and bots available which have been created by ‘Gurus’ to make Forex trading easy. The thing is though, if trading was easy, everyone would do it. There are absolutely programs which will help you do your job, but don’t fall into the trap of thinking that you can shortcut a lot of practice, dedication and training by paying $200 for some snazzy looking software.
Good Forex traders have a system, they use rules to keep their wins safe and their losses minimal. Rookie Forex traders often make the mistake of holding out to see what happens – this is basically gambling and is not a good way to make a profit.
When your system indicates you should close a trade, close it immediately. Discipline is your number one weapon against losing money.
If you enter a trade and it immediately goes down-hill you will have to close it, cut your losses and move on. When you are starting out though, especially if you are playing with money you can’t afford to lose, it only takes a couple of these hits to knock you off your game plan. Again, discipline – that’s what you need.
Getting The Wrong Info
There are more than a couple of different exchange rates at any one time. You buy at one rate and sell at another and you need your profit to cover that gap and then some. Make sure you use a good currency converter and get lots of up to date info on where the rate is going and why. Understanding the underlying causes of any movements will help you to trade better.
One final point: 90% of your profit is made before you enter a position. I’m no going to go into the minutae of how to plan a trade, but suffice to say, if you don’t do the planning, and if you get lazy, you will lose money.
Forex is a great way to make money, but it isn’t quick and it isn’t easy. Before you get involved you should carefully assess if you have the dedication, patience and discipline to avoid making these mistakes yourself. I hope you do!
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