Managing Risks While Spread Betting In Forex

A risky but worthy ordeal, spread betting can pay off very well if you know how to approach your trades. However, the catch here is that you stand a good chance at losing money, just as you do at profiting. The reason behind a majority of these risks is because of leveraging trades. Forex trading allows traders to make use of leverage, which is essentially money borrowed from brokers in order to hold positions of higher monetary value. 

However, when a leveraged trade is lost, the borrowed money is lost as well - and the cumulative sum of this is incurred by the trader. 

Forex Demo Account

This potential of losing more money than invested makes spread betting a very risky ordeal in Forex. To make good returns while keeping the losses minimal, risk management is essential. 

Here are some simple steps to manage your risks in a healthy manner:

1) Leverage Minimally: 

Leverage is truly a wonderful provision, but if you over-leverage or are very callous while working with this borrowed sum, you will incur heavy losses! Several Forex traders are able to multiply their profits by huge amounts when they leverage with caution. Always do your fair share of market research before playing around with leverage. 

2) Stay Aware Of Economic Happenings: 

Economic, political and social factors affect the currency market deeply. As a Forex trader, you will be subjected to a lot of risks stemming from these factors. Hence, the need for staying adept and being aware of what's happening around you. When you're abreast of how the currency markets are behaving and what's causing said behavior, you will be able to see stellar results in your exchanges. 

3) Plan Your Trades Thoroughly: 

Planning only one or a handful of aspects isn't going to be enough to see victories in your exchanges. Everything from the currency pair selected to the strategy chosen, to the entries/exits have to be planned immaculately.

4) Work With Stop-Loss Orders In Place: 

Always have stop-loss orders to pull you out of trades. Stop orders help you minimize losses, secure your capital and live to trade another day, by cutting you off from a trade the moment losses are seen! 

Always start off with practice - open a Forex Demo Account in Malaysia today, and learn from the bests at WesternFX! We house incredibly talented minds, who will provide you with the guidance you need to place winning trades, and the best of trading facilities. Work with proven Forex Trading Strategies and trade on award-winning platforms - reach out to us today to get started!