Forex: Five quick wins to limit trading losses

Compared to the stock or bond markets, Forex – or Foreign Exchange – has the highest average daily trading volume and is the largest market in the world.

Capital preservation is a key component of Forex trading success
Capital preservation is a key component of Forex trading success

It provides traders with a variety of benefits by design, such as the largest leverage of any investment venue and constant market activity throughout the trading week.

In this article experts Forex Suggest outline five winning ways to help dealers join the exclusive group of traders who consistently profit on the foreign exchange market.

They says these five guidelines are intended to make trading more profitable and advance trading careers.

1.Track daily pivot points

Whether you prefer position trading, swing trading, or trading primarily on longer time frames, it is crucial that you pay attention to daily pivot points.

Daily pivot points should be monitored by traders of all styles in search of confirmation of their trading assumptions or warning of a reversal in the market.

Consider pivot points and the accompanying trading activity as a supporting technical indicator that may be used in combination with your preferred trading approach.

2.Be cautious with your capital

Rather than focusing on making huge gains, Forex traders should prioritise minimising losses. If you're just starting out in the market, you might not think that makes sense, but that is the case nonetheless. Capital preservation is a key component of forex trading success.

In reality, the main reason that most people who try their hand at forex trading fail is because they exhaust their funds too quickly. You need to have enough money in your trading account to take advantage of a lucrative trading opportunity when it arises.

3.Trade Forex using your own advantage

The best traders are the ones who only take a chance with their capital when a favourable market condition improves the likelihood that the transaction they make will be profitable.

Your advantage can be anything from the timing of your purchase to the specifics of your purchase, but one example is buying at a price level that has historically provided strong support for the market.

Having a variety of technical indicators working in your favour can give you an upper hand and boost your chances of success.

4.Don’t overcomplicate your analysis

Technical analysis can be applied to a chart in an almost infinite number of different ways. But it's not true that more is always (or even often) better.

Most of the time, a trader's ability to see the forest for the trees is hindered by the fact that they are trying to make sense of a vast number of indicators at once.

Successful transactions are more likely to result from a trading strategy that is straightforward, using only a few number of rules and requiring consideration of a few key indicators.

5.Use reasonable stop-loss orders

It's a common misconception among inexperienced traders that placing a stop-loss order near to the moment of entry into a trade is all that has to be done in terms of risk management.

In fact, transactions with stop-loss levels that are too far from the trade's entry point can create an unfavourable risk-to-reward ratio.

If your understanding of the market is correct, the market will not trade at the price at which your stop-loss order is set.