How to Take the Stress Out of Trading
When it comes to investing your hard-earned money, it’s human nature to feel some stress due to the fear of the unknown. What if the market turns against you? What if the value of your asset goes down? What if the broker or exchange you use turns out to be a scam?
While you’ll never be able to remove some of those negative feelings altogether when investing, there are plenty of ways in which you can reduce your fear. Using automated tools can lower your risk and eliminate the specter of ’emotional trading’ altogether.
And when you know how to spot a forex scam, you can ease your fears of investing your money with a rogue operator. So, let’s look at three ways to help take the stress out of trading.
Spot a Forex Scam
In an ideal world, you would be able to sign up with a trading brokerage or exchange with complete confidence – safe in the knowledge that your money was protected and that the operator had your best interests at heart.
While, for the most part, that is the case, there are still plenty of fraudulent firms, scams, and incompetents thriving in the trading world, and it’s essential to spot them in advance so that you don’t risk losing your capital or having your data stolen.
Forex scams are not limited to a broker or exchange simply disappearing into the night with your money. Other examples include placing trades on your behalf that don’t fit your investing goals. They can profit from commissions, fees, and even from the spread in some cases, pushing you into investing in other assets. They might fail to execute agreed trades or even suggest they have ‘insider information’ that could help you enter a profitable position.
Worst of all, they may delay and even ignore you altogether when you make a withdrawal request.
So how can we minimize the risk of being caught up in the trap of a scam broker? Firstly, we should ensure that any brokerage we deal with is regulated and approved by a recognized authority – in the US, that would be the Securities and Exchange Commission (SEC) and or the Financial Industry Regulatory Authority (FINRA).
Then we’re looking for signs of competence. Is the broker’s website or the exchange secure? Are their customers’ personal details encrypted? Do they store their clients’ capital in recognized banks and financial institutions, and are those funds ringfenced so that even if the broker/exchange goes bust, you will get your money back?
All this information should be clearly displayed in the operator’s terms and conditions, and if it isn’t, ensure you send them a message to find out why.
There are other items to consider. Check how quickly the firm will action withdrawal requests; within 48 (working) hours is the standard. Also, establish if they have a dedicated customer support team and study the range of tradable products they offer and the spreads implied with each.
If you find a broker or exchange that ticks these boxes, you are on the right track.
Use Automated Trading
Feeling over-confident and chasing losses are the two ends of the emotional trading spectrum.
By automating your trading processes, you can eliminate these feelings in a calculated, almost robotic way – setting entry and exit points and sitting back on your hands as the market does its thing.
If you plan to implement a particular trading strategy, you can use automated tools for backtesting its efficacy – another upside of bots’ software in your trading activity.
Use stop-loss/take-profit
If your fear is of the market bottoming out – and losing a considerable chunk of your investment, you can use a Stop-Loss marker that will automatically close your open trades at a designated point.
On the flip side, you may worry that when everything is going well, it’s almost inevitable that things will take a turn – self-sabotage is common in the mind of traders! There’s a tool for that, too: Take Profit, which will automatically close your position at a pre-arranged point, ensuring you walk away with a green trade.
If you are worried about indiscipline in your trading or are concerned about the market moving when you cannot close your position, then using these automation tools will help remove your worry.
So there you have it. Three ways in which you can remove the stress from your trading. Best of luck with your investments!