Five proven technique to protect the trading fund
Beginner traders are always excited about making a big profit. They don’t think about the risk factors or the consequence of using the leverage trading account. Many rookies in Hong Kong often fall for scam brokers and lose their savings. It’s true, trading can make your life easier. But statistically speaking, this market has changed only 3% of the retail trader’s life. You might be stunned to know this fact. In most cases, 97% of the retail traders are losing money since they don’t have any control over their investment. They are taking random steps to place the orders and blowing up the account.
So, how can we keep the capital safe? Use the five tips preferred by pro traders and you won’t blow up your trading account.
1. Trade with idle money
You should not be trading with your savings. Many websites suggest the trader’s trade with savings. But savings are for bad times. You never know the result of the trades. You must have idle money before you even think about investing a couple of bucks with a reputed broker. The reputed brokers are not going to accept a couple of hundreds of dollars. They have high deposit requirements since they know the low capital investors will take a high risk to multiple the profit. As a result of this aggressive approach, they will lose money. You have to trade with money that you can lose without losing any sleep.
2. Are you ready to lose?
You have to be ready to lose trades. Accepting this reality is very hard in the online Forex trading industry. The rookies get nuts after losing a few hundreds of dollars or a certain portion of the capital. They start following the amateurs in the trading community and try to recover the loss. In the worst-case scenario, they buy the signals from the scam sites and lose money at trading.
Be mentally prepared to accept the losses since it is the core foundation of trading. Without having the ability to accept the losses, you should not be trading with real money.
3. Setting up the risk to reward ratio
This is the most important part of trading. Your risk to reward ratio defines the risk exposure at trading. If you trade with the regulated broker, you can go through their educational resources and learn more about the advance technique of improving the RR ratio. By maintaining a high RR ratio, you can afford to lose trades without having any stress.
Curate the trading method in such a unique way so that winners are always bigger than the losers. The minimum RR ratio should be 1:2 no matter how good the trade setup is.
4. Control the urge
Rookies are always in a hurry. They are trying to catch the missed opportunities and end up by placing trades against the trend. You should have the ability to control the urge at trading. Without having this skill, you are nothing but a gambler. Consider yourself as a hunter. Wait for the right opportunity to strike. You know you have one chance to nail the target. If you miss it, you have nothing to lose. Wait for the next opportunity. Opportunities will always present itself and you have to take advantage of it.
5. Control your leverage
Taking control of the leverage trading account is a challenging task. In most cases, the rookies don’t have the skills to control the leverage. They take random trades and try to make big gains with high risk. But to solve this crisis in trading, you should have a strategic plan. The strategic plan should also include the risk policy per trade.
You might feel the urge to break the rules but you know you can’t afford to give into your urge. If possible, trade with a low leverage account to keep your capital safe.