Forex trading has risks. The truth is that a high percentage of forex traders lose money. ESMA regulations require every regulated broker in the EU to disclose the percentage of their clients who lose money. If you will check this you will find that over 60% of customers lose money.
Ways to reduce forex trading risks:
Set Stop Losses and Take Profit
Stop loss means ordering your broker to sell when the currency price reaches a predetermined losing price. By doing so you define the maximum loss you can achieve. The same goes for profit – you can order a broker to sell the currency when the price of the currency reaches a predetermined price.
Low leverage trading
High leverage can dramatically increase your profit in case of successful trading, but can dramatically increase your losses on losing trades so use leverage carefully and wisely
Set realistic profit goal
Setting high profit goals leads to taking high risks in order to meet these goals. Set realistic goals. If you want to trade at high risk – do so only after gaining experience and only in a small part of your trading budget.
Diversify your forex portfolio
Investing in one currency pair its like putting all eggs in one basket… invest on few currency pairs to reduce risks.
Use brokers who offer the option to get money back in case of losing trades
It’s not that the brokers are so nice that they will return your money in case of losing trades, but some of the brokers offer to buy something like insurance for losing trades. This means that when you open new trades you choose the duration of protection and see the cost for protecting losing trades. The longer the time for protection, the higher the cost.