Forex: Diversify Your Trading

Trading Forex is very risky and statistics show that 90% of the people who trade Forex lose money.

One of the reasons why people who trade Forex lose money is that they always trade the same currency and they trade it on the worst market conditions. For example if the EUR/USD is currently being traded at 1.35 it is very hard to know what will happen next because the EUR/USD can go as low as 1.25 and as high as 1.46 so 1.35 is right in the middle, which means it has maybe a 50% chance of either going up or down.

In such market conditions people are likely to lose all their money because they risk everything and trade on the wrong side.

Diversifying your trade means that you will trade other currencies which are much secure at the moment than the EUR/USD and you will have a a much higher chance of being on the right side because the currencies you are now going to trade beyond the EUR/USD may be hitting the rock bottom or the top high.

I always trade at least 5 pairs so if one loses me money, the other four currencies will make me money and this way I avoid losing all my money to a bad trade.

Another trading policy you should adopt is to never invest more than 10% of your capital in one trade and if you do use a very short stop loss otherwise the risk of losing a lot of money and get a high drawdown is critically high.

If you still insist on trading the EUR/USD only then please follow expert signals that win more than they lose and avoid always to use all your capital on the trade because even if you buy and the currency goes down and you buy again, if the currency goes down just a little bit more, all your money is at stake and is critically in risk of vaporization.

Forex is a high risk business, trade safely.