Forex trading can be complex, but as it was mentioned before, learning the basics can save a trader from huge losses. There are a few other things a trader can do to maximize profits and avoid loss. First, don’t let a winner become a loser. It’s difficult enough to be correct on a trader, so why should traders make it harder on themselves by letting a winning trade slip through their fingers? Protect profits by running a trailing stop, and don’t let gains just accumulate unchecked.
Don’t pyramid positions either. Adding smaller positions to a winning trade might work well in other markets, but in the forex market it doesn’t work. This goes for hedging to cover a bad position as well. The only thing that a hedge will do for a trader is to increase the brokerage fees they have to pay. Instead of hedging a bad position, close it and get it. Clearing the head and moving on allows a trader to move beyond letting their emotions rule their decisions, and get on with making a profit with their strategy.
Beyond this, traders should make sure that they are not chasing losses.
Instead, simply take the loss and move on: it’s part of the business, and all traders should come in expecting to have many losses. While straddling might seem like a good idea, cross positions can be riskier than outright trades, so trying to cover a loss by doing this is simply a bad move.
Traders should also attempt to reduce their leverage, make their stops closer, and liquidate before meeting a margin call. Trading is about capital preservation, and doing these three things will make that a possibility.