How to Minimise Losses in the Forex Market

 

Every business is bound to incur expenses. Forex is a business and should be treated as such. Since expenses are an inevitable aspect of business, we should try as much as possible to avoid much of it or rather reduce it to the barest minimum as follows:-

{1} KNOWLEDGE OF THE MARKET:-
knowledge of the Forex market is very important. Please ensure that you undergo proper training and retraining in other to have a grasp of the mechanics of the market. most traders get “swollen headed” after attending seminars and feel that they know-it-all thereby throwing caution to the wind. Proper training and retraining are being conducted at Instaforex Nigeria Office

{2i} PROPER RISK/MONEY MANAGEMENT:-
Instaforex trading platform is a micro platform which enables traders with small amount(beginners) as well as experienced traders with enhanced capital to participate in the Forex market. Hence InstaForex is regarded as one of the best Broker in the world mostly in Asia and in most developing nations of the world today. It’s risk/money management is embedded in its platform and it is well elucidated. The proper application would enable the trader to last long in this business and to grow his account(s) accordingly. Always remember that “little drops of water makes a mighty ocean”.

{2ii} ALWAYS REMEMBER TO SET YOUR STOP LOSS(SL) AND TAKE PROFIT(TP):-
It is generally said in Forex that “show me a trader that does not set stop loses(SL) and take profit(TP) and I would show you a trader whose account would soon be  wiped out “. Without stops your capital will be exposed to the whims and caprices of the market.

The essence of Stop-loss as the name goes is to take you out as soon as price hits it,that is said to be your exit point. Most inexperienced traders/beginners haven seen one or two high volatile movement would say “Ha! if i had known, i wouldn’t have set take profit(TP)”.This is a very wrong thing to either say or do. It simply  shows that the trader lacks contentment and is very greedy. Some traders on the other hand would say “HA! i wouldn’t have set stop-loss, wow the market is moving in my direction after hitting my stop-loss”. This is equally very wrong of such traders. Without your stops you don’t have a trading plan.

Please always exhibit contentment and learn from your mistakes, you could equally use trailing stops as well, no stops at all is never the right thing to do.Please  always ensure that your stops are in place. Either use reward/risk ratios of 1:1 or 1:2.

{3} INADEQUATE CAPITAL:
When you invest small or little you must be able to have enough patience and learn to grow gradually. In as much as one of the advantages of Forex is the application of leverage, one must be skillful and knowledgeable enough in order to effectively utilise it. Always remember the saying that “habits die hard”. Though leverage would  help you make more money, always remember that it is a two-edged sword, in the sense that it could “make you” as well as “unmake you”. Please don’t be like the stupid investor who gets wiped off in no distant time. Forex is and should be seen/taken as a live-long business and not be treated as a casino(Gambling).

{4} OVER TRADING:
Avoid a situation where you find yourself placing excess trades, most traders in a bid to make-up for some of their losses,place multiple trades,this is not the right thing to do. When you are wrong in your decision to either buy or sell accept that you are wrong and get the hell out of the market as tomorrow is another day. You must learn to accept losses as well as to be contented when you have profitable trades no matter how little or small they are.

{5} EMOTIONAL INSTABILITY:
This leads traders(especially beginners) to greed which is a very bad vice and bane of many traders. Greed coupled with emotional instability would make you to negate the rules, yield to external interference or influence of your trading peers. Please avoid revenge-trading as one can not make a sound decision with an unstable mind- that would adversely affect your trades.

{6} KEEP A TRADING JOURNAL:
This is one of the trading rules which most traders fail to observe, they feel they have it all “upstairs” (in their head).Trading journal would enable you to know/observe or have records of your trades. Why,when and the reasons for placing such trades,your stops,take profit price levels. Trading is business and every business must have records of its transactions, Forex is no exception.

The trade journal would help you to know what went wrong, why you lost your trade, and if a profitable trade, would enable you to know/have a record of the decision you took which ended up in a profitable trade. So,please ensure that you keep/observe a trade journal. It would definitely help you in minimising your losses.

{7} MENTORSHIP/MENTORING:
In every business that enquires knowledge,skill,techniques and strategy, mentoring is vital of which Forex is one of them. Mentoring is one of the ways that any serious trainee(s) or trader(s) could utilise in order to avoid/minimise much of the inherent pitfalls in the Forex market. With mentoring or when you have a mentor you’ll learn faster and be light years ahead of your trading peers.

At InstaForex Nigeria Office mentoring is part of our curriculum. Trainees have access to InstaForex professionals either on one-on-one basis or Online and calls in sorting out their challanges

PAUL ODIBELI
Chief Analyst
InstaForex Nigeria
www.instaforex.com.ng

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