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If you’re serious about making money through savvy, informed trading you’re probably wondering how to avoid losing on forex markets.

The truth is that the forex risks of trading are often ignored by starry eyed future-traders who think that trading is simple and getting rich is quick and easy. We all suffer from various psychological biases and can easily get caught up in emotions which can negatively affect your ability to trade profitability.

That’s why it’s important we take the opportunity to go through some trading and forex tips to help you avoid losing money through currency pairs trading.

Do the research

Knowledge is power. If you’re serious about forex trading, you should be serious about doing your homework. From understanding the fundamentals to knowing the pros and cons of each strategy of trading, there’s no such thing as “knowing too much”.

Focus on the markets

This might seem obvious, but it could surprise you how little focus can be placed on understanding the forex market itself. Forex trading might share similarities with commodity or stock trading, but there are also substantial and significant differences. Focusing on the factors in the market that affect the prices of currency pairs will help you develop a deep understanding of how forex trading works. The more you understand the more advantage you’ll be able to take, and the more profit you’ll be able to make.

Train

You wouldn’t attempt to run a marathon without training first, and forex trading is no different in this respect. Training platforms are widely available online and use the conditions and fluctuates of the real market to offer budding trainers a risk-free opportunity to develop and hone their skills. By using these platforms to train before risking a single cent of your finances, you’ll be able to put your best foot forwards when it comes time to actually trade.

Develop a strategy

Developing, and sticking to, a trading strategy is the backbone of profitable trading. Part of developing a plan includes ensuring you understand your goals, determine your tolerance of risk, and set your time-horizon. Armed with this understanding, you’ll be best positioned to select the type of trading strategy that is best for you. It’s then up to you to stick to the plan in the face of changes in the market to ensure you avoid losing money as much as possible.

Develop resilience against ‘trader mindset’

Traders, like all humans, are subject to the various emotions and biases that can negatively impact our ability to make informed decisions. Focusing on being self-aware enough to recognise your emotional and cognitive biases will help you develop strong ‘muscles’ to resist making wrong decisions that could cost you money.

Set your limits

Part of your strategy should be to know, set and stick to your limits. Your risk-reward ratio, leverage ratio and access to finance will help you determine these limits. Without sticking these flags in the sand, you’ll be tempted to disobey your trading strategy in the heat of the moment of trading. Knowing when to stop, when to wait, and when to trade will help you minimise your losses.

Tortoise vs Hare

The famous parable of the tortoise racing the hare is an important metaphor in understanding how to make the most in forex trading. Consistent, steady and considered trading will outlast knee-jerk and brash decisions. Keep educating yourself and maintain a positive outlook that still takes into account negative outcomes. Remember: everyone loses money at some point. Be patient, remain disciplined and be the tortoise in the race no matter how long or short your trading positions are.

Analyse, analyse, analyse

Some traders focus their market analysis on fundamentals informed by global, political and financial events. Others focus on technical analysis and indicators to make their forex trading decisions. Whether you prefer one method of analysis or another, or you’re one of the many traders who blend the two, make sure that you conduct thorough and informed analyses of the market and its conditions before making forex trades.

Be open to change

Markets change and fluctuate by nature. Even the best laid plans by the best forex investors require change and adaptation from time to time. By being open to change and appropriately adaptable, you’ll be able to pivot within your chosen strategy to avoid losing money.

Find a trading platform

If you engage in a subpar trading platform or choose the wrong trading partner your trading could suffer from higher pricing, delayed trades and unreliable platforms. The best way to mitigate the likelihood of losing money forex trading is to choose a high quality trading partner.

Forex Trading with Global Prime

There you have it. By preparing yourself with forex tips to avoid the risks of the market, you’ll be ensuring you’re in the best position possible to avoid losing money on forex trading.

Global Prime offers clients an unrivalled forex trading experience to help boost your performance, prevent slippage and deliver you competitive currency pair prices.

As a global yet decentralised market, the foreign exchange currency market is the largest market in the world. So make sure you partner with the team best positioned for best execution.

Trade with Global Prime. To find out more, check out our forex trading page.