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How to Avoid Losing Money Trading Forex

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How to Avoid Losing Money Trading Forex

Almost all seasoned forex traders have been through tough times where multiple losses seem to come out of virtually nowhere. This phenomenon can cause substantial distress, especially among those new to trading forex. If you lack a prudent money management strategy, then losing money in that way could quickly put you out of business.

Professional traders already know that a string of losing trades can occur, so they generally include a money management component in their trading plan to deal with just such an event. A decent forex profit strategy will usually include a position-sizing component and where stop-loss orders should be placed to best manage your risk of loss. Read on for more information on this important topic for forex traders. 

Why Do Most Traders Lose Money?

The majority of those who start trading forex lose money, so it’s very important to start off on the right foot. The main reasons that traders lose money when trading currencies tend to fall into several categories. The more common of these reasons are listed below. 

  • Lack of knowledge: Knowledge is power, and nowhere is the saying more true than when trading in the forex market. Currency valuations depend on economic and geopolitical events in the countries represented by both currencies in a currency pair, so the more informed you are on these subjects, the higher your likelihood of making a profit in forex.
  • No well-defined trading plan: Any seasoned forex trader will advise you to trade with a plan. Trading without a tested and profitable forex trading plan is like starting a long trip without a map; you’ll be directionless in the market, which could cost you a significant amount of money unless you happen to be very lucky. 
  • Emotional involvement: Emotional involvement with trades is the downfall of many forex traders. While making profits can be emotionally satisfying, most people fear losing money, which makes fear and greed the two most important emotions to control when trading. The most successful traders have a dispassionate attitude towards gains and losses and stick to their trading plan, which avoids getting overly emotional when trading. 
  • Poor money management: A money management component to your trading plan is essential to making consistent profits as a trader. To make money forex trading, you typically need to break down your account into trading units and seldom risk more than a certain percentage per trade. Prudent money management, including stop-loss orders, has saved countless traders from certain ruin. 

11 Tips for More Profitable Forex Trading

Most retail forex traders do not make money, so to become one of the profitable ones, you need to start off on the right foot. Benzinga has compiled a list of 11 tips to help improve your chances of trading currencies profitably. 

Study Forex Trading

Before you start doing any currency trading, you really need to do your homework. This means learning about what moves the forex market and how to operate successfully within it. You’ll also want to develop and test a sensible forex strategy that has a decent chance of helping you trade profitably. 

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Work With a Reputable Broker

Not all online forex brokers are created equal, so forex traders should choose one carefully that has a good reputation and oversight from a major regulator to avoid losing their deposited funds to a scam broker. If you live in the United States, you’ll want to open an account with an online broker that is a member of the National Futures Association (NFA) and is registered with the Commodity Futures Trading Commission (CFTC).

Learn to Trade With a Practice Account

A practice or demo account lets you test out trading ideas and methods without putting actual money on the line. Practice accounts let you learn to trade and can potentially help you avoid losing money from beginner’s mistakes. 

Know When to Accept Losses

Sound money management techniques include the need to take small losses from time to time to eliminate the possibility of taking even bigger losses in the future. You can often enter a forex trading position at any market exchange rate and still make money if you know how to get out of the trade properly. 

Keep Charts Clean

Keeping things simple and effective when you are performing technical analysis means you can generally make faster trading decisions. This practice will not only let you take advantage of more opportunities when trading forex, but it can also prevent losses from getting out of hand. 

Start Small When Going Live

Practicing in a demo account cannot exactly simulate live trading because of the emotional involvement you experience when your money is at risk. Avoid getting overly confident by putting large sums of money on the line right off the bat since that can result in larger initial losses. Instead, start small when you’re first trading in a live account and progress to trading bigger positions over time as your confidence increases. 

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Keep Your Emotions Out of It

Your emotional reactions cannot be fully prepared for and understood until you experience trading in a live environment. When you get overly emotional, you may overlook vital aspects of trading, so do your best to develop an objective trading system to avoid having emotional responses impact your forex trading decisions. 

Use Reasonable Leverage

Most experienced traders think of leverage as a double-edged sword since it can magnify profits as well as losses when trading currencies. Make sure you use reasonable leverage ratios when trading, which can vary depending on what sort of trading strategy you use. 

Make Record Keeping a Priority

Keeping good records when trading can help you identify reasons why you remain unsuccessful so that you can address them. For example, you might need to alter your trading behavior significantly or update your strategy to account for a change in market conditions. You can keep trading records in a notebook or a spreadsheet, or you can use professionally developed trade journaling software, such as that provided by TraderVue.  

Treat Trading Like You’re Running a Business

Keep in mind that individual wins and losses do not matter that much in the short run. To treat your forex trading activities more like a business, you first need to have a plan. You should also focus on how your trading business will perform over time and aim to achieve consistently positive long-term results from a well-defined trading strategy.

Get Educated on Tax Implications

It makes sense to educate yourself on the tax treatment and implications of your forex trading activity so that you are prepared at tax time. This will help you avoid any nasty tax surprises and let you take advantage of advantageous tax laws. Consulting a qualified accountant or tax specialist can help you develop a plan to minimize your tax liability when trading forex. 

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Benzinga’s Top Forex Trading Platforms

To trade forex online as a retail trader, you will need to use a forex trading platform supported by an online forex broker. Benzinga has taken some of the guesswork out of selecting a decent currency trading platform by creating the following comparison table listing some top forex trading platforms.

Claim Exclusive Offers

  • securely through CedarFX’s website

    CedarFX is not regulated by any major financial agency. The brokerage is owned by Cedar LLC and based in St. Vincent and the Grenadines.

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  • securely through IG Markets’s website

  • securely through Forex.com’s website

  • securely through AvaTrade’s website

Frequently Asked Questions

Q

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Can I lose all my money in forex?

A

If you put money at risk by taking a position in a forex trading account, and the market moves against you, then you can lose all of that deposited money. If your account does not have negative balance protection, then you may even owe additional money to your forex broker depending on where your losing trades were automatically closed out.

Q

Do Forex brokers want you to lose?

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A

It depends. Forex brokers that also operate as market makers can benefit financially from the market moving against any positions you establish that would cause you to lose money. In contrast, online brokers that use a straight-through processing, and electronic communication network models tend to benefit more from you making money since that means you might continue trading, which will result in you paying them commissions and widened dealing spreads over time.

Q

Can you earn a living day trading?

A

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Most professional day traders operating at major financial institutions make money for their employers, and they get paid a decent salary and a performance-related bonus for doing so. Some retail traders might manage to earn a living from day trading but most do not.

BIT

․bit Raises $13M To Build Cross-Chain Decentralized Identity Protocol

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․bit Raises $13M To Build Cross-Chain Decentralized Identity Protocol

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.bit (did.id) has raised $13 million to build a cross-chain decentralized identity protocol. The Series A round, completed one year after the startup’s launch, was from CMB International, HashKey Capital, QingSong Fund, GSR Ventures, GGV Capital, and SNZ.

.bit’s open-source blockchain protocol will provide permissionless decentralized identification for individual users and DAOs. Over the past 12 months, the project’s user and developer communities have experienced strong growth. Almost 100 mainstream wallets and dApps have already integrated with .bit and more than 38k independent addresses have registered for more than 110k .bit accounts.

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In the web2 era, social profiles are stored on centralized databases by tech giants who can revoke access or alter data at will. Accounts may be blocked or deactivated at any time, leading to censorship and deplatforming. Utilizing web3 technology, .bit will empower individuals to truly own and control their data. Users will enjoy identity sovereignty, both as private persons and as corporate entities.

Initial applications for .bit’s decentralized identity protocol include Cryptocurrency transfer, decentralized domain resolution, personal profile display, etc. It is expected that .bit will eventually be used as membership and credential management for DAOs, brands and IPs, celebrities and fans, clubs and communities.

Further use cases for .bit’s decentralized identity product include supporting the one billion citizens who lack legal identification. This makes it impossible for them to prove their identity, obtain basic government benefits or healthcare, enroll in education, or exercise their right to vote.

As a cross-chain solution, .bit has supported Ethereum, Tron, Binance Smart Chain, Nervos CKB, and Polygon. In the future, .bit will cover all mainstream public chains such as Bitcoin, Dogecoin, Polkadot, Solana, etc., as well as software and hardware devices that support asymmetric encryption algorithms.

Forthcoming features under development also include NameDAO, which will assign a portion of .bit protocol’s revenue to DAOs and sub-accounts that will be issued to DAO members, brand adopters, and loyal supporters to strengthen web3 communities, and further lower the threshold for registering accounts, 4-9 digits account available to 100% and open up 3 digits accounts, which will announce the specific rules on the official Twitter very soon.

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About .bit

.bit is a cross-chain decentralized identity protocol launched in July 2021. It has boasts over 110k accounts and integrated with 100+ wallets and dApps such as Trust Wallet, Torus, TokenPocket, imToken, iToken, BitKeep, AlphaWallet, HyperPay, MathWallet, WePiggy, NFTSCan, NFTGO, Relation, ShowMe, UneMeta, Dtools, Evolution Land, UniPass, Mail3, Link3, Quest3, 0xEcho, Transit Swap, 5Degrees, cc0.network, COCH, SeekDID, DASLA, SuperDID and many others. The startup comprises a small team of ten spread across the U.S., China, and Singapore, led by Tim Yoeh, Specer Shaw, Jeff Jin, Kyle Wright, who were colleagues at Tencent. Most of .bit’s members have extensive experience in the Web3 industry.

For more information, find .bit online:

Website: https://did.id
Twitter: @dotbitHQ
Discord: https://discord.gg/did
GitHub: https://github.com/dotbitHQ
Team Blog: https://blog.did.id
Forum: https://talk.did.id
Medium: https://medium.com/@dotbit
NameDAO Website: https://namedao.xyz


This is a sponsored post. Learn how to reach our audience here. Read disclaimer below.

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Brazil

President Of Central Bank Of Brazil Disagrees With ‘Heavy Hand’ Regulations For Cryptocurrencies

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President Of Central Bank Of Brazil Disagrees With ‘Heavy Hand’ Regulations For Cryptocurrencies

The president of the Central Bank of Brazil, Roberto Campos Neto, has defended the use of more moderate regulations in the crypto environment. Campos Neto stated that while regulation is indeed necessary, it has to be done in a way that doesn’t stop innovation. He also explained his goal is to connect the digital with the regulated world.

Central Bank of Brazil President Criticizes Harsh Approach to Crypto Regulation

Central banks of several nations around the world are starting to establish their stances when it comes to cryptocurrencies and central bank digital currencies (CBDCs). At “The regulation of cryptocurrencies in Brazil and in the world,” a debate event, the president of the Central Bank of Brazil, Roberto Campos Neto, presented his thoughts about cryptocurrency regulation.

According to Campos Neto, regulation of these instruments should be made in a way that allows for innovation and growth of investments in cryptocurrencies. He stated:

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In general, central bankers want to regulate with a heavy hand. I understand, but I don’t agree. Maybe it’s a mistake to regulate like that … We shouldn’t leave behind the technological advances that will come with this.

Furthermore, Campos Neto detailed that one of his goals is to integrate the digital and the regulatory world, in a different way from what other central banks are doing.

Similar Opinions

The president of the Brazilian Securities and Values Commission (CVM), João Pedro Nascimento, also stated he had similar ideas, saying that regulation should not stifle the growth of the crypto market. He declared:

Banning a revolution is not something we will do.

Nascimento had previously declared there is a natural demand for cryptocurrency regulation as a consequence of the evolution of the technology. The CVM has proposed an advisory opinion regarding crypto and its treatment, that is under review, to be used before a crypto-centric law is sanctioned.

The legislative process for approving a cryptocurrency bill is quite advanced in the country. A cryptocurrency-centric bill, that would help to bring clarity to the crypto markets and virtual asset service providers, is currently waiting to be discussed by the deputy chamber in September. However, due to the proximity of the general ballot to elect the president, vice-president, and members of Congress, this discussion might be delayed again.

What do you think about the opinion of the president of the Central Bank of Brazil regarding crypto regulation? Tell us in the comments section below.

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Sergio Goschenko

Sergio is a cryptocurrency journalist based in Venezuela. He describes himself as late to the game, entering the cryptosphere when the price rise happened during December 2017. Having a computer engineering background, living in Venezuela, and being impacted by the cryptocurrency boom at a social level, he offers a different point of view about crypto success and how it helps the unbanked and underserved.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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Analysis

Bitcoin, Ethereum Technical Analysis: BTC Lower, Following Brief Rally Above $25,000

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Bitcoin, Ethereum Technical Analysis: BTC Lower, Following Brief Rally Above $25,000

Bitcoin was trading lower to start the week, after the token briefly rose above $25,000 during Sunday’s session. As of writing, the global cryptocurrency market cap is currently trading 2.85% lower. Ethereum also dropped lower on Monday, with prices moving away from a recent high above $2,000.

Bitcoin

After a brief stint above $25,000 over the weekend, bitcoin (BTC) was trading in the red to start the new week.

On Sunday, BTC/USD hit an intraday high of $25,135.59, however the world’s largest token slipped to a bottom of $23,960.03 today.

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Sunday’s high was the most bitcoin has traded at since June 14, when prices of the token were over $26,700.

BTC/USD – Daily Chart

Looking at the chart, today’s decline in price comes after a resistance level of $24,800 was hit over the weekend, with bulls unable to sustain the uptrend required to push prices higher.

In addition to this, the 14-day relative strength index (RSI) is tracking at 56.44, which comes after failing to break out of a ceiling of 61.80.

This continues to be the main obstacle in the way of BTC rising back above $25,000 for a longer period of time.

Ethereum

In addition to BTC falling below $25,000, ethereum (ETH) also slipped to start the week, as the token dropped below $2,000.

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Over the weekend, prices of the world’s second-largest token by market capitalization moved above $2,000 for the first time since May.

However, on Monday, ETH/USD dropped to a low of $1,887.82, which was less than a day after trading at a high of $2,007.21.

ETH/USD – Daily Chart

This bearish turn in ethereum also comes as a result of the RSI being overbought, as it climbed above 71, which was its highest point since April 4.

As of writing, the index is tracking at 62, which comes as bearish sentiment swept through markets to start the week.

Prices will now be tested, with the index now close to a floor of 61, and should momentum move below this point, then we could see further declines.

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Register your email here to get weekly price analysis updates sent to your inbox:

Can ethereum climb back above $2,000 this week? Leave your thoughts in the comments below.

Eliman Dambell

Eliman brings a eclectic point of view to market analysis, having worked as a brokerage director, retail trading educator, and market commentator in Crypto, Stocks and FX.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

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Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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