Is Risk-Free Forex Trading Possible?

Off the very start, you need to understand one thing – risk-free is a term that depends on your definition of the word. When speaking about trade, what you need to keep in mind is the fact that there will always be some risk. However, this risk is often exaggerated by those who did nothing to minimize it or, at least, make contingency plans. By doing everything right in the preparation stage, you can make your forex trading much less risky. Here are several such steps that you should consider.

Stop order

The first thing you need to do in order to make Forex trading less risky is to set a stop order. For this to work, you need to develop a better understanding of your trading priorities. Remember, you’re here to profit, not to have a great investment record. When you look at it, if you set a stop loss order at 1-2 percent and your stop gain order at 6 or 7 percent, what you’ll create is a scenario where you can be profitable with as little as 25 to 30 percent of successful trades. This drastically increases the chance of success and reduces the risk of loss, at the same time. Still, it’s quite easy to see why some would get discouraged by such a large number of unsuccessful trades, which might make a problem for traders who fail to adopt the right mindset.

Play it safe with leverage

One of the biggest mistakes that people make is overusing the Forex leverage. In theory, this allows them to use much bigger funds (10, 20, 50 or even 100 times bigger) than their initial capital would allow in order to maximize their gains early on. As always, there’s a darker side to this trend, as well. As a result, you can lose money more quickly than you normally would, even though a margin call function wouldn’t allow you to lose more than is acceptable. What you need, early on, is experience, so try to avoid big trades until you know how the market’s working.

Day trading

One of the reasons why so many traders fail is due to the fact that people ignore their investments for a prolonged period of time, which prevents them from responding in due time. Day trading can help you avoid this by having all your trades completed within a single day. For this kind of real-time trading, what you need is a specialized platform like Ever Forex. Due to the fact that this platform is cloud-based, you can access your assets via any device that you’re using, which means that you gain 24/7 control over all your Forex investments. This minimizes the risk of something unforeseen taking place, while you’re unavailable (due to the fact that you’ll never be truly unavailable).

Choose your pairs

One thing that makes the world of forex quite unique is the fact that each currency pair interaction tends to be quite unique. In theory, there’s a fortune to be made trading with unknown currencies, yet, this kind of behavior is more gamble-like. Therefore, what you need to do is choose your pairs carefully. A great tip would be to choose a pair with your own currency. For instance, if you’re an Australia-based trader, great pairs for you would be AUD/USD, AUD/CAD or GBP/AUD. Still, any other major currency pair would do, as well.

Don’t risk more than you can handle

The simplest way you can approach Forex trading as risk-free is to set up a trading fund. As always, you should never risk more money than you can afford to lose. It’s even better if you could find a proprietary fund that doesn’t ask you to cover the loss. In theory, this would be the closest possible thing to risk-free Forex trading, seeing as how you get to benefit from the profit and allow the fund to cover the losses. A clear and undeniable win-win scenario seeing as how you’re never risking your own money.

Conclusion

The last thing we need to discuss is the misconception that a great trader always listens to their intuition. This is simply not true and this behavior pattern is also more becoming of a gambler than of a serious Forex trader. Make sure to develop a strategy based on market analysis, previous research, experiences of seasoned Forex traders and trading philosophy. Markets behave in agreement to certain patterns and you need to figure out what they are in order to maximize your chances. This way, you’ll be able to trade as risk-free as possible on the Forex market.