Minimizing Risks in Forex Trading

Some of us may think that forex investing and trading is very risky investment. Why? What are the reasons? There are two main reasons that make investing in forex trading is becoming too risky:

• Leverage is too high

• Scam

In essence, those two reasons are acceptable and reasonable. But in my opinion, there are things we can do to avoid excessive risk and minimizing risks in forex trading.

Risks Relating to Leverage

Indeed, many brokers that offer fantastic leverage. As we know, leverage serves as to increase the strength of our transaction. The higher the leverage we use, the greater our opportunity to take advantage of our invested capital.

Of course, brokers offer leverage this high to attract traders because they also compete with other brokers. Actually it is still okay if we take advantage of that high leverage offer from the brokerage in which we trade. Nevertheless, we need to remember the basic principles of investing: 'the higher the profits that we expect, the greater will be that we must bear'.

To minimize the risks associated with leverage, what we can do is adjust the quantity per trade with a number of our capital (money), controlling used margins and available margin and also the available margin power to anticipate price movements that may not fit with what we expect. Essentially is back to margin management and money management and adjust the selection of your leverage with your trading style and habits.

So, how much leverage you use really depends on your choice.

Risks Relating to Scam

We are sure to feel upset when we do trading and want to make the withdrawal, but the broker does not pay. Or even paid, but it's too late. The waiting time is not as promised.

To avoid a scam brokers, it is recommended that before we determine the broker where we want to do trading, we need to see and check whether the broker is to be trusted.

There are many sources where you can find out which brokers are relatively credible and safe place to invest your money. You can find information on the web about the legality of a broker and also see the power of capital support from companies who supporting the broker.

You can also ask your fellow traders who are more experienced. Take reference from them about broker who has proven the easy withdraw and its 'honesty' before deciding to use that broker in the trading.

That's the thing we can do to minimize risks in forex trading. Surely in the end, the results obtained from trading will be greatly influenced by many factors, such as trading systems and strategies that we use, our discipline in following a trading plan and also psychological factors.

Indeed, there is no risk-free investment. One of our tasks as a trader (investor) is to understand and manage risk.

Warren Buffett says: "Risk comes from not knowing what you are doing."

So, identify and understand all things, including the risks before you decide to do something, in this case as well as in investing.

Happy trading!

Related Post