Why trade the Forex market?

Trading the Forex market is rather different than trading any other financial markets, such as stocks, futures or options. Due to the fact that the Forex market offers the biggest leverage, this makes all the difference.

Obviously, being able to trade with much more money than what you actually have in your trading account can be both an advantage and a disadvantage. If you don’t have a lot of money to trade with, then you may assume that using a high leverage on all your trades will allow you to make a lot of profits fast. By doing this, you’re ignoring the fact that the Forex market, as any other business, has its own risks, and in this particular case, the risk is losing your entire account.

If you think this won’t happen to you, allow me to remember you that more than 90% of all Forex traders fail, and this is one of the primary reasons. But using leverage can also lead you to be fearful. You’re aware of the risks and you just can’t pull the trigger. Usually, this happens because you’re trading with your hard-earned money, and you just don’t and can’t afford to lose it. This may be a signal that you’re not trading with capital you can afford to lose, which is one of the main rules to start trading any financial market.

You need to be aware that you will have wins and losses when trading the Forex market. It’s just the way it is. What you need to do is to actually learn how to make your profits consistent and reduce your losses. Reducing the losses may not refer to reduce the number of losses but the amount of the loss per trade. This is done using risk management rules incorporated in your trading strategy, no matter if you’re trading manually or using a Forex robot.

So, what should you do?

If you’re just starting to trade the Forex market, make sure you have a good Forex system. Not a system that may give you, occasionally, a huge profit along with severe losses along the way, but a Forex system that can make you small and consistent profits, with small draw-downs. Make sure your system follows some risk management rules that will allow you to both grow and protect your trading account.

You can always test your system by using a free demo account that is offered by most Forex brokers. This may help you fine-tune your system and search for some flaws and ways to improve it. Using a demo account will also allow you to interact with the market itself and the trading platform before you trade with a real money account.

When you feel your system is just the way you want, then go to a real account. But just a piece of advice here: no matter how good your system performed in the demo account, don’t start trading big. Start small, in order to gain confidence. After all, this is what you’ve been working for and it’s all in stake: the money in your trading account and your ability to make money trading Forex.

When you first start trading the Forex market with a real account, you may feel your emotions come into play, and this may lead you to not following your system rules that worked so well in the demo account. Make sure you pay attention to this, since this is one of the main reasons Forex traders fail. If you notice something is wrong, just stop trading.

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