Since many want to start Forex trade, especially in the year of pandemic, seeing it as an additional source of (passive) income, it’s good to know what’s the most important about it, since Forex is prone to different types of scams, like any other business.
This article wants to discuss Forex trade risks and what you can do to lessen one’s chance. We will prepare you for what’s important to know and adjust if you’re not the best in a specific area, and hopefully, it will improve not only trading but your life in general.
Money management
If you know where your money goes, it will be easier for you to control your investments (to be more precise, how much you invest), in your trading. People who ran with risky Forex trades and it didn’t go well for them, were usually the ones who wanted quick cash, were very impulsive and weren’t informed enough about the topic. Prioritize your money outside trading, first so you can make a solid trading plan after.
Even if you invest a minimal amount, going into trading is not a solution to your debt. Once you put everything on your paper, it can be tough to face yourself, but you will start changing the situation and the circumstances. This way, you will avoid impulsive trades, once you become a trader, and you will lessen the stress factor.
Find a trustworthy brokerage
Research on the internet doesn’t have to be an endless whirlpool. There are many forex trade regulators, where you can check if the company you are interested in is on their list on licensed brokerages. If not, move on. This way, scams are avoided, and you stay protected. Same goes with choosing the right broker for you. Selecting the right forex broker can avoid many risks from being scammed by a random person that pretends to be an experienced broker with extensive knowledge.
A forex expert is someone who will guide you along the way and explain to you everything you need to know if you are a beginner. You can even spot a scammer if somebody is calling you out of the blue, to tell you you should invest an insane amount of money right now (because it’s the right moment). A licensed broker would never do that; they will usually prevent your bad decisions, and it’s up to you if you still want to do something your broker advised you not to. It’s your trading account, in the end.
A licensed broker should be available via multiple platforms, and if he’s not working at the moment, you can always contact customer support if it’s something urgent. That’s one of the benefits of having an account with a certified brokerage.
Having a trading strategy
Another risk that everyone can come across is losing your money on Forex. After all, you practically don’t know what you are doing because you haven’t done your research, you started trading live too early, and you didn’t devise a trading strategy (which is a must!). Your trading plan will be made with the help of your broker, but you should be the one who’s transparent about your money habits and money in general. By doing so, you will make your experience better, and your broker’s job easier.
Your strategy will change over time, as you progress and learn, but it’s good to stick to it when you are just starting. This way, you can prevent random investments you are not so sure about. If you are interested in something, but you didn’t plan to invest in it, talk about it with your broker first. This way, you will gain knowledge, see why you should or shouldn’t make certain moves, and progress as a trader, without taking huge risks. Of course, everything in life has a certain percentage of uncertainty, but we can always find a way to minimize them.
