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It is easy to get started with trading Forex, but sadly the vast majority of people who try it lose their money. The reason for this is that foreign currency trading is complex, and it involves predicting the movements of international markets – things that are complex and seemingly have a life of their own.
There is a lot of risk associated with foreign currency trading, since when you buy currency you are usually allowed to do so using leverage – and that leverage could be 50:1 or even greater – meaning that for every dollar you put down, you get 50 dollars worth of currency. The thing with leverage is that while you are amplifying your profits – should you make them – you also amplify your losses. If your currency loses a lot of value, you could lose all of your bankroll and then end up owing the brokers money as well.
Given that, you may be wondering why anyone would start with trading Forex at https://www.xtrade.com/ and invest in currencies. Well, there are things that you can do to maximise your chances of making money, and guarantee that your losses will never be more than a certain level.
The first thing you should do is make sure that you have a bankroll which could cover a few weeks’ worth of foreign currency trading. The longer the better. Everyone, even the best and most experienced traders on the market, will make a loss at some point. The more money you have in reserve, the more chances you have to overcome those losses.
Secondly, you need to get used to the trading Forex platform that you are working with. Every trading platform works slightly differently, and you need to learn how to look at trend lines, how to set stop losses, and how to set points for taking your earnings too.
You should set stop losses at a point where they will sell your currency if the value of the currency pair is getting dangerously low. Set it low enough that you won’t sell on a temporary dip (because the currency could bounce back) but high enough that you won’t wait until you’ve lost all of your money by the time you sell. This is a very important part of foreign currency trading. There are technical analysis tools that will help you to work out the best points for this, based on mathematical formulae and the past history of the markets. Use these formulae to figure out where to put your triggers (platforms like Meta Trader 4 have technical analysis overlays built-in), and then you can make your trades and turn your attention away from the computer for a time.
Fundamental analysis can be a valuable part of foreign currency trading, too. This is paying attention to important news events and economic announcements. It takes a while to get a feel for what different elements of fundamental analysis mean in trading Forex, but it is worth it, because it will give you some idea of where the markets may be trending, before the movements are reflected in the trendline in your trading software.