If you wish to avoid making losses when trading in Hong Kong, there are many things you need to take into consideration. You can’t just jump straight in and expect your trading account balance to be increasing all the time.
Once you start trading, however, you must keep profits coming in and keep losses at bay. It’s important not to lose sight of why you’re involved in this for financial gain over the longer term. For those looking at how to make money online, forex could be an ideal market for what they want to achieve because it has low barriers of entry (requires no specialist knowledge) but still offers high potential rewards as long as you know what you’re doing.
Here are ten tips on how to avoid making trading losses when trading in Hong Kong:
Stick to your strategy
Sticking to your strategy is paramount, but remember, there is no one size fits all approach to any market. As the old saying goes, ‘No plan survives first contact with the enemy. You will encounter some resistance or unexpected shock, which can cause you to stray away from your chosen path. This shouldn’t be too much of a problem if you have prepared for this contingency beforehand, familiarising yourself with potential obstacles which may arise and establishing levels at which these problems could impact your trading style.
Trading becomes exponentially more difficult the higher the stakes. The temptation to start taking risks to try and capture more significant gains is high. However, trading with large sums of money is a dangerous business, making it harder than usual to keep your emotions in check. Consider starting small if you think you’re unlikely to maintain a sensible approach when trading big.
Keep track of your expenses
Keeping track of the amount of time spent trading and the total invested, along with profits made, is essential. This gives you an indication of your strengths (and weaknesses) which can prove invaluable later on down the line if you feel like tweaking certain aspects of your strategy, giving it that little extra edge, or perhaps taking away one or two risky actions which may impact returns adversely.
Have a home base
A good idea is to have a ‘home base’ with a set amount of money that you draw from when your current trading capital starts to dwindle. Any significant losses won’t lead to an account being closed down entirely if you have this. In addition, check the availability of automated stop-loss features on your chosen platform. Using these can mean that you automatically close out a trade if it falls by a certain percentage during a specified period. This means that there’s no need to closely monitor market activity or be glued to charts at all times in case something goes wrong and potentially impacts negatively upon profits.
Remaining patient is essential here, too, especially for those just starting and learning the ropes (or perhaps making mistakes). Market conditions may not always favour the type of trade you want to make, which can lead to a build-up of capital, meaning that money is not put to good use. If possible, try holding on for as long as possible (or at least until market conditions appear more amenable) before placing your trade. This minimizes the chance of making trading losses.
Do some basic research on trading platforms first before deciding to join any. This way, you can find out where the most valuable information is likely to be coming from so that you don’t waste time by following advice which is no better than the strategies of new traders. You can also gauge how friendly or helpful members are towards newer traders because this determines whether they’re worth buying tips from or not. We recommend using a reliable and reputable online broker from Saxo Bank; for more information, get it here.