This article looks at the different techniques one can use to avoid losses on the foreign exchange Melbourne market.
Approximately 90% of all foreign exchange traders will experience at least one detrimental, account depleting loss during the foreign exchange trading career. Furthermore, traders only begin showing profit after the first year of trading and many experienced traders are often just breaking even. By reading these statistics, it is wonder individuals enter the foreign exchange Melbourne market at all. However, forex trading can be profitable if you learn how to avoid and reduce the risk of losses.
Getting an education
Many new traders enter the foreign exchange Melbourne market with bundles of enthusiasm forgetting to undergo forex training. However, it is recommended that one complete some training as foreign exchange can be very complicated if you are completely inexperienced and unknowledgeable. These training programmes can be found online and are made to meet your time commitments. Be sure to learn as much as possible about the forex market, forex trading and the different associated aspects – the more you learn, the less chance of detrimental losses.
The demo account
The demo account is a form of forex training and is highly recommended for all new traders. This ‘practice’ account provides you with the opportunity to hone your trading skills in a simulated and safe trading environment. It gives you a feel for the market and trading, as well as the trading platform.
While the demo account is highly beneficial in gaining experience, you must use it correctly for the experience to be of any value. A demo account allows you to trade with unrealistic amounts of leverage and virtual capital; therefore it is recommended that you adjust these amounts in order to develop a more realistic perspective of trading. The demo account is available via a forex broker.
The forex broker
As the foreign exchange market is decentralised, there is no need for forex brokers to be regulated according to the forex market. However, certain countries have governing authorities that call for a registration of local brokerages in order to protect traders. To avoid scam brokers, it is recommended that you conduct a background check and ensure your broker is registered with their local governing authority.
You should also examine the services a broker is offering you, especially the leverage rations, spreads, initial deposits and withdrawal policies. All this information should be available on the forex broker’s website. If it is not and they are not willing to discuss the topic then you should consider looking at another brokerage.
Managing funds on the foreign exchange Melbourne market
It is important to conduct preparation before entering the market, but it is also important to know when to leave the demo account and trade live. Once you feel you have learned as much as possible about the market, and you are confident in your skills, then you should consider transitioning to a forex live account. You should also have a strong trading plan in place with a risk and money management strategy. These are highly important as they will assist in avoiding detrimental losses on the foreign exchange Melbourne market.
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