Trading forex can be a lucrative venture, but it can also be precarious if you don’t know what you are doing.
Using sound trading techniques with a low probability of causing losses is vital to reduce risk exposure while trading in forex. Follow Saxo broker Dubai for more in-depth information.
Napoleon Hill has once said that “Compound interest is the eighth wonder of the world.” One can only imagine how powerful it would be if your capital and returns could grow and earn you even more money. This is what we call ‘building a fortune’.
Many people think that creating a fortune takes years – but this isn’t true – building a fortune takes knowledge, dedication and time.
They provide real-time research, analysis and strategies for free on their blog to aid traders in learning the basics of forex trading before applying it to their trades.
Buy foreign currency
You can add a lot of value to your existing money by trading in the forex market without taking too much risk.
It would help find low-risk trading techniques that work and use them accordingly. One such process is to buy the EUR/USD when it falls and sell it when it rises above its previous peak(s).
This way, you will be making 100 pips each time with a small amount of risk involved compared to the above strategy.
Major Economic Events
The third trading technique is to trade when major economic events are scheduled for release from Australia and New Zealand.
Such events include employment data, inflation rates, housing prices and interest rates, which affect the overall economy positively or negatively.
Using this simple trading technique without too much risk attached, you can make upwards of 30-50 pips in a single day.
The market becomes highly volatile and moves in unexpected directions during such times.
Deal with the trend
Another low-risk technique used when trading in the forex market is to deal with the trend. You accomplish this by looking at the daily or weekly charts to identify the overall trend and then trade in the same direction accordingly.
This way, you minimise your losses if the market moves against you and maximise your profits if the market moves in your favour. Most of the time, the markets move in trends, and it is wiser to trade with them rather than against them.
Deal with the news
A fifth technique that can be used when trading in forex is to deal with the news. You have to wait for major economic events scheduled for release and then trade in the direction of their release.
You have to look at the hourly or daily charts and see how the market moved after the media released such events.
Buying dips and selling high
A sixth low-risk forex trading technique is based on buying dips and selling high. This means that you should buy a currency pair such as GBP/USD if its value falls and sell it if the price rises above its previous peak(s).
Use stop losses
A seventh trading technique that can be used to minimise your risk while trading in forex is to use stop losses.
A stop loss is simply an order that you place with your broker, which gets executed automatically once the currency pair hits a predetermined price level that you have set.
Support and resistance levels.
An eighth forex trading technique involves using support and resistance levels in your favour.
These refer to the fixed price levels at which buying or selling pressure in a particular currency pair intensifies due to various factors such as traders looking for an ideal entry point, stop losses hitting their respective targets etc.
You can capitalise on such areas by entering trades after waiting for some time and following up if the business goes your way. This way, you will be minimising your risk while maximising your profits.
A ninth forex trading technique that can reduce your risk exposure is hedging techniques.
Hedging involves taking two opposite positions on a particular currency pair such that if one trade goes wrong, the other trade will make up for the losses.
The tenth and final low-risk forex trading technique used when trading in Mena are using technical analysis.
This involves studying charts and looking for patterns that have a high probability of repeating themselves in the future.