Is there a breakeven point in Forex trading?
The main goal of any trader is to reduce the number of unprofitable transactions and thereby increase the overall level of profit.
It should be noted that completely breakeven Forex trading is practically impossible; one can only minimize potential losses, thereby improving the overall financial result over a certain period of time.
To solve this problem, you need to understand the main causes of losses when trading on the forex market, as preventing a problem is much easier than fixing it later.
Profitable forex trading is all about taking a smart approach to risk management.
The risks vary, so for maximum effect, all possible options should be considered.
How to Make Break-Even Forex Trading a Reality
It's important to note that completely breakeven trading on the Forex market is virtually impossible, but there are several factors that, if eliminated, can significantly reduce losses.
1. Incorrect trade direction : You opened a position, and the price immediately moved against you. To prevent this from happening, you should check the direction of the prevailing trend before opening each order.
Open trades not in the direction of a correction, but in the direction of the main trend. To identify this, open several windows with different time frames at once. This will provide a more complete picture of what's happening in Forex at the moment. The three-screen principle works with almost any strategy.
2. Trend reversals can happen at any time, so to minimize losses, set a stop-loss after each order. Then, constantly move it to the break-even zone; you can use a trailing stop .
Furthermore, don't forget to monitor the factors that trigger such reversals and, at the first sign, close the trade yourself, without waiting for stop orders to be triggered. Stop orders are the foundation of any breakeven Forex trading; the key is to correctly define their parameters and not delay placing them.
3. Technical problems – this group includes almost any issue that disrupts software or hardware. Computers tend to freeze and connections to be lost.
Therefore, if you trade large sums, don't be lazy and install a duplicate terminal on your phone or another computer, and also write down your broker's phone number and account access password.
It can be quite frustrating when such a failure results in the loss of several thousand dollars, but its occurrence can be prevented by spending just a hundred dollars and a couple of hours of time.
4. Order failures – this is the most common reason for losses: a set stop-loss or pending order fails to trigger, and the deposit is lost.
The main cause of such problems is price gaps, after which the stop-loss is triggered at a price different from the one selected when it was placed. The same applies to pending orders.
Therefore, it is advisable to close positions when there is a high risk of gaps occurring; price gaps usually occur after weekends and holidays.
In addition to reducing losses, you can improve your financial results from stock trading by increasing your profit per trade. To do this, you should take a more responsible approach to closing profitable trades, closing such positions only after achieving the maximum possible profit.
To do this, move your take-profit and stop-loss orders with the market. Replace the stop-loss with a trailing stop as soon as possible, and move the take-profit order further if the current trend continues.
Breakeven trading on the Forex exchange can also be characterized as working on the Forex market without significant deposit drawdowns, the amount of which exceeds more than 10% of the amount of funds in your account.
This result is achieved through the competent use of money management and compliance with all the above-mentioned measures for transaction security.
