Wednesday, February 13, 2013

Avoiding/reducing risk when trading Forex:


There is significant risk in any foreign exchange deal. Any transaction involving currencies involves risks, including, but not limited to, the potential for changing political and/or economic conditions, that may substantially affect the price or liquidity of a currency.
Moreover, the leveraged nature of Forex trading means that any market movement will have an equally proportional effect on your deposited funds. This may work against you as well as for you. The possibility exists that you could sustain a total loss of your initial margin funds and be required to deposit additional funds to maintain your position. If you fail to meet any margin call within the time prescribed, your position will be liquidated and you will be responsible for any resulting losses. “Stop-Loss” or “Take-Profit” order strategies may lower an investor's exposure to risk.
Easy-Forex™ foreign exchange technology links around-the-clock to the world's foreign currency exchange trading floors to get the lowest foreign currency rates and to take every opportunity to make or settle a transaction.
Avoiding/reducing risk when trading Forex:
Trade like a technical analyst does. For the best possible results, understanding the fundamentals behind an investment also requires understanding the technical analysis method. When your fundamental and technical signals point in the same direction, you have a good chance of having a successful trade, especially with good money management skills. Use simple support and resistance technical analysis, Fibonacci Retracing and reversal days.
• Be disciplined;
• Create a position and understand your reasons for having that position;
• Establish Stop-Loss and Take-Profit levels.
Discipline includes hitting your stops and not following the temptation to stay with a losing position that has gone through your Stop-Loss level.

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