When you begin trading fx, you have new dangers to face. Learn about some of these dangers and what you can do about them.
When trading forex, it’s important to remember that there are dangers.
When you start trading forex, those dangers are at their greatest. You lack experience, your understanding of the forex market, forex trading strategies and the factors that influence currencies might be relatively small… and mistakes can be very expensive!
When you’re just starting out in the forex markets then, bear in mind the following:
The danger — The forex market moves fast and you can lose your money just as quickly. And because it moves constantly, 24 hours a day, you can even lose it while you sleep, waking up to a giant loss.
The solution — Prepare well before you start trading forex. Take a forex trading course, make dummy trades using the sort of amounts that you’ll be investing and make sure before you create your first position that you know exactly how the forex market works.
The danger — Because forex trading by the public is relatively new, a number of unscrupulous traders have sprung up who operate illegally or scam their clients. There aren’t many of them, but they do exist and you do want to avoid them.
The solution — Make sure that your trading firm is accredited and legal, and read the small print in the website terms or contract carefully. They might not be the most interesting read in the world, but they should be read.
The danger — Place a bet on a roulette wheel or on a horse and the amount you put down is the amount you stand to lose. Take a position in the forex market, and it’s might not be completely clear how much you’re risking. Leverage, in which small amounts of money control large units of currency, make those risks even greater.
The solution — Use strategically placed stop-losses to minimize your risks and ensure that a losing position is ended before the losses grow too large.
There are risks in any form of investment. Understand the risks of the forex market — and how to reduce them — and while you won’t be able to remove them entirely, you should be able to protect yourself.
Don’t be too scared though.. try this in practice in a demo account for example at paddypowertrader.com