Three Ways to Manage the Risks of Trading the Foreign Exchange Market - FX Solutions

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Aug 31, 2011, 06:31 ET

NEW YORK, August 31, 2011 /PRNewswire/ --

Here are three tips on forex risk management from award-winning broker FX Solutions (http://www.fxsolutions.com/).

Keep your trade sizes sensible

Even the most experienced trader can be outmanoeuvred by the breakneck pace of the foreign exchange market, not to mention the leverage involved in forex trading. Leverage can boost your profits, but it can also magnify your losses in the same way should the markets move against you. Every forex trader gets things wrong at some point, so never trade more than you can afford to lose. A bad trade is forgivable - an overtrade is not.

Know your markets and the activity around them

As Sandy Jadeja, Technical Strategist of FX Solutions, states: "The methods of utilizing technical analysis are many and varied. They include such ubiquitous concepts as head and shoulders, support and resistance, trends, moving averages, and double-tops."

Fundamental analysis also brings a host of potential catalysts into consideration in the form of major economic reports and news events. Analyse both past technical data and news feeds to gain a clearer picture of the state of a currency.

Make use of all the tools available

FX Solutions offers free newsfeeds, tutorials, forex charting packages and more, all of which can provide you with invaluable support and insights into workings of the foreign exchange market.

Another effective tool to minimize your potential downsides is to employ stop-loss orders on every trade you place. Stop-losses automatically exit a position when a trade reaches a certain price point, therefore limiting losses or locking in profits depending on the point at which they are applied.

For example, imagine the euro is about to rise against the U.S. dollar, and that you have opened a position of 100,000 units at $1.4500. Placing a stop-loss order at $1.4460 would limit your maximum loss to $400 while also giving the trade room to potentially turn around should the market start to move against you.

Find out more about the forex trading tools available from FX Solutions, by visiting the company's education centre at:

http://www.fxsolutions.com/learning-tools/education-center.asp

Forex trading involves substantial risk of loss and is not suitable for all investors.

About FX Solutions

FX Solutions is a leading foreign exchange broker with a focus on advanced forex trading technologies, transparency of transaction and unparalleled customer service. FX Solutions serves retail clients, white label partners, institutional trading partners and introducing brokers in over 140 countries.

FX Solutions' products are regulated in the United States, United Kingdom and Australia. FX Solutions in the United States is regulated as a member of National Futures Association, and registered with the Commodity Futures Trading Commission as a Futures Commission Merchant. In the United Kingdom, FX Solutions is a registered trading name of City Index Limited which is authorized and regulated by the Financial Services Authority. FX Solutions in Australia is a registered trading name of City Index Australia Pty Ltd. which is authorized and regulated by the Australian Securities and Investments Commission.

For more information on forex trading, or to open a free forex demo account, please visit http://www.fxsolutions.com http://www.fxsol.co.uk and http://www.fxsolutions.com.au

SOURCE FX Solutions