Tips To Avoid Losing Money In Forex

Let’s be honest. If you are a total beginner and you are trading on a real account, you have to be ready to burn some of your cash eventually. But when you do so, you better understand why you are losing that money. In other words, losing money should be part of your learning curve.

Otherwise, we all know less stressful and probably funnier ways to empty a wallet. So, a common question made by traders is: can losing money in forex be avoided? You can avoid losing a lot of money, but (as I said) some cash you will leave on the way. Again, that’s normal.

1 - Prepare yourself

The obvious advice. Get ready for the challenge. If you want to invest without moving a finger, then Forex is not your best choice. Forex is about doing your homework, understanding how it works and how you can make something of it. That requires time, reading and analyzing. There are better conditions for trading, but there are simply no shortcuts to become successful.

2 - Work only with the best

As I mentioned “better conditions” for trading, what I meant is that you should find a broker that offers you the right service for your needs. For example, flexible or fixed spreads, ECN accounts, and many other options out there.

3 - Stop overloading your charts

Both technical and fundamental analysis are required to success in Forex trading. However, we are all humans and we tend to build our preferences. Those inclined for technical analysis rely too much, too often on their indicators. Try to keep it cleaner. Identify which indicators work best for the pairs you are trading and stick to them. Do not overload your screen with elements.

4 - Start real, start small

Demo accounts are great (when you know absolutely nothing about Forex). If you have been practicing for a while, don’t fear and try out a real account. You can start with a tiny amount such as $100. It is not about the gains, but rather about the feeling that is real. It will help you build a real trading mindset for when you can put a few thousand in the account.

5 - Leverage - not your friend

It’s tempting, I know. You put $100 and you trade with one hundred times that amount or even more. But remember that opportunities have two sides, a positive one and a negative one. Keep your leverage small until you are more comfortable with yourself.

FortFS