Is it possible to trade forex profitably without risk?
Depositing money in bank deposits implies a minimal risk of losing them. However, the interest rates on deposits offered by banks do not even allow to cover losses from inflation. This circumstance forces people who have spare cash to look for other ways of investing it.
Trading currency on the Forex market can be one of these options. Speculative currency trading can yield good income but risks of financial losses are increasing as well.
Novice traders usually start their trading career by searching for a winning forex strategy. Experienced traders have long been convinced of the fact that currency speculation in the market is not possible without losses. But they know that using money management is a way to minimize financial risks.
This article is about methods of reducing risks of losing deposits.
Reducing risks - saving deposit
The first thing is to thoroughly prepare each deal. In this process, the trader should use all available tools - price charts, technical and fundamental analysis, and reliable indicators signals.
During trading, it is necessary to use the principle of diversifying the deposit. According to this principle, a trader should trade on several currency pairs and use various trading strategies.
Forex hedging will also help to reduce trading risks on the currency market. It consists of opening trading positions in forward and backward direction. It is used in case of market instability and expectations of sharp price changes of the traded currency pair. A hedging strategy can be called a win-win strategy, but it will not bring you much profit. Here you should be able to close loss-making positions opportunely to allow the growth of profitable positions.
The next method of saving capital is conservative trading strategies ensuring high preservation of the trader's equity. However, in this case one should not expect excessive profit.
The trading terminal allows a trader to plan and limit the possible losses in advance. Stop-loss limiting the drawdown is intended for this purpose. If the asset price reverses and moves in an undesirable direction, when it reaches the stop-loss level the trade will be automatically closed.