While there’s no doubt that a considerable amount of money can be made trading forex, studies suggest that most practitioners actually lose money over a concerted period of time.
The precise number of traders who lose money is hotly disputed, but while conservative estimates suggest a figure in the region of 70% and 80%, some place it far higher at a whopping 90%!
With this mind, it’s crucial that you take practical steps to help you minimise losses if you’re to achieve long-term success as a trader. Here are some ideas to keep in mind.
- Understand the Market’s Fundamentals
Let’s face facts; as it’s impossible to crack the international forex market without first understanding it’s core fundamentals.
In particular, you’ll need to appreciate the underlying rules and mechanisms that govern change in the forex marketplace, as this creates a sense of determinism that minimises the risk of ill-judged and emotive trades.
This requires a dedicated period of theoretical learning, with books, webinars and online courses available to help you build a viable base of knowledge.
- Use a Demo Account and Gain Practical Market Experience
While the first step is to build your knowledge of the forex market and international currencies, this arguably means little without practical experience of how live and real money currency trading works.
This is where demo accounts can come in handy, as they allow you to trade in a simulated, real-time market environment without risking your hard-earned cash.
As a result, you can hone your carefully cultivated strategies over time, while experimenting with different assets and currencies pairings as a way of potentially diversifying your interests.
Typically, you can use a demo account for a period of between three and six months, which should provide ample time to establish a viable trading strategy.
- Utilise the MetaTrader 4 (MT4) Platform
On a final note, the type of trading platform that you use can also have a significant bearing on your ability to cap forex trading losses.
For example, advanced and established programs such as the MetaTrader 4 (MT4) offer a comprehensive service to clients, while the charts and tools deployed to analyse relevant trends can also be customised to suit your unique needs.
This certainly optimises your ability to make effective and accurate trading decisions in real-time, which is crucial if you retain a short-term outlook and operate as a scalper or day trader.
The MT4 is also particularly easy to use as well, while it has been specifically designed for those who trade international currencies!