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How to protect your trading capital in the long run

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  • How to protect your trading capital in the long run

    Trading is one of the most lucrative business in this competitive world. Those who have truly mastered the art of trading business can easily make a huge profit. In fact, you can easily secure your financial freedom just by trading the live asset. You donít have to invest a huge amount of money since brokers like Saxo is offering high leverage trading account. Just by using the leverage you can easily execute big lot trade even with small investment. But leverage is like a double edge sword. Being a novice trader you might even blow your trading account by taking excessive risk. There are a few things you need to follow to protect your trading capital. Letís explore the details.

    Follow the simple 2% rule of investment

    Being a new trader, you should never risk more than 2% of your account balance in any single trade. You might think trading is all about high volume trading but in reality, itís more about managing your risk factors. Some of you might think the basic 2% rule of risk management never works in the long run but this is the only way to protect your trading capital. However, you can increase your risk factors over the period of time as you gain experience. But never take more than 5% risk in any trade even though you are absolutely convinced with a certain trade setup.

    Avoid trading the high impact news

    News trading might seem extremely profitable to new traders but in reality, this is the riskiest trading strategy. Unless you are 100% sure about your fundamental analysis, chances are very high you will lose a big sum of money. Never try to execute any trade without doing the proper fundamental analysis. The experienced traders always use the best Forex trading account in Singapore to trade the high impact news so that they donít have to face any technical difficulties during the extreme level of market volatility. Unless you have extensive experience, you should never trade the news. If you do, chose an elite class broker like Saxo to ensure you have access to the best possible trading environment.

    Trading with the market trend

    Trend trading strategy is one of the easiest ways to avoid losing trades. Those who are new to the currency trading business might think they can easily make a huge profit by trading with the minor retracement of the market. At times such strategy might work but considering the long term consequences, this is a suicide mission. You have to rely on a long term trend to find the best trade setup. If necessary, wait in the sideline for weeks but never execute any trade in the lower time frame. Try to improvise things to find the very best trade setups.

    Keeping yourself tuned with the latest market news

    Being a fulltime trader you must keep on learning new things. At times you need to take some small break and demo trade the market to fix the bugs in your trading strategy. Never try to trade with one simple rules as it never works in this dynamic market. You need to have the ability to adapt to the market dynamics or else it wonít take much time to lose your investment. Think twice before you execute any trade and focus on the long term market goals.

    Learn to think outside of the box

    You cannot survive in the retail trading industry based on the traditional approach. You have to learn the proper way to improvise things or else it wonít take much time to lose a significant portion of your investment. At times you will see things are not looking right in the charts. This is where you need to need to improvise and stay away from any trade execution. Always think from an investorís perspective to protect your trading capital.
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