How to Profit Off the Forex Market

how to profit off the forex marketThe foreign exchange market (Forex) is a high risk, high reward investment platform. It involves trading one currency for another. While there are a lot of advantages to Forex trading, there are some things that require caution. Here are a few tips that should help minimize the risks involved.

Tip 1: Stop-Loss Strategy

It’s essential to protect every trade with a stop-loss. That way, if the trade goes too far south, you will be forced out of it. Doing this will also keep you from pulling out of a trade too early. Many people make the mistake of pulling out of a trade once they see it drop significantly within a short period of time. However, sometimes the Forex market will go against your trade in the beginning. Setting a stop-loss point will keep you from making the mistake of getting out of a trade too early.

On the other hand, placing a stop-loss will also make sure you only lose a set amount of money. One of the most important aspects of Forex trading is money management. Therefore, when setting the stop-loss you will know that you can control your losses.

As you can see, having a stop-loss in place will keep emotions from becoming a factor. Emotions are the downfall of many Forex beginners. Since you are in control of the risk, you will be less likely to feel the effects when a trade goes against you.

Tip2: Risk Control

As stated above, controlling the risk of a trade is an important part of profiting from the Forex market. The first step is to determine how much money you can afford to lose if a trade goes against you. The three common amounts are:
• 3% – Low Risk
• 5% – Medium Risk
• 10% – High Risk

Once you have established that factor, you will not only know what to set the stop-loss at, but the lot size to use when trading.

Tip 3: Know when to Take your Profits

The risk factor should also include when to take your profits. A lot of beginners make the mistake of staying in a trade too long. Upon doing this, they end up losing some of those very profits. The risk factor should work at both ends of a trade. In other words, if you set your risk factor at 3%, then take the profits once they reach 3%. Most platforms allow you to set this point when buying into a trade. Be sure to take advantage of this.

 

Tip 4: Don’t be Greedy

Never risk more than 10% of your portfolio on a single trade. This is also a mistake that many beginners make. Risking too much will force you out of trades too early. Although Forex is a very high profit opportunity, being greedy will cause you to quickly lose all of your money. Use only controlled strategies.

Tip 5: Test

Always test new strategies on a demo account before using them on your real life assets.

Contact a LucrorFx specialist today for a consultation.

 

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