Without investing money in any business, you can’t generate profit. Those who think that trading is the only profession in which they can make a profit without investing a substantial amount of money don’t know about the concept of leverage. Though it’s true, you will have access to high leverage account, you should not increase the risk of more than 2%. If you do so, a few losing trades will ruin your career. Things are not only dependent on the risk management policy. The successful traders in Hong Kong also put a great deal of emphasis on the selection of a broker. They prefer to trade with brokers like Saxo since it helps them to execute quality trades without having any issues. Let’s learn some amazing techniques by which you can protect your trading capital.
Use a perfect plan
Do you know any businessman in real life? If so, ask them how they are running their business. They will tell you a robust strategy by which they are dealing with their customers and making a profit. In trading, you don’t have to deal with the customers but still, you have to use a perfect plan. Without having strong knowledge of news analysis and technical parameters of the market, you will fail to find good trade setups. Most amateurs trade without knowing the essential elements required to protect their investment. They execute random trades at a different time and lose most of their investment. Unlike them, the expert always uses a balanced trading plan so that they can trade with an extreme level of ease.
Learn to stop
As a new trader, it’s very normal to become aggressive after losing a few trades in Forex. But aggression can’t help you to recover the loss. You have to know the limit so that you can stop trading the market after losing a few consecutive trades. For instance, if you lose more than 3% in a single day, you should not trade the real market. Think about long term goals and try to improve your trading edge by learning from your mistakes. You don’t have to recover the loss just after having a losing trades. The market will always give you the opportunity and present your quality trade setups. Develop patience and wait for the best signals to recover the loss. Control your aggression and use rational logic in trading.
Trade with the trend
Everyone thinks money management is the only way to protect your trading capital. But this is not entirely true when you start to trade the market on a fulltime basis. Most of the time, naïve investors end up trading against the major trend. There is a proverb in the retail trading market, “The trend is your friend”. So, if you fail to stick to the market trend, the chances of losing trades will rise become a trend trader and learn to use the Fibonacci tools so that you can find the endpoint of the market retracement. At times you might have to trade the reversal but for that, you have to learn chart pattern trading.
Last but not least, we have a money management strategy to protect our trading capital. Based on your risk tolerance level, you have to determine the lot size. Those who think they can lose more than 5% in each trade, don’t understand the concept of Forex trading. They are here to make a quick profit. Trading is not a shortcut way to become rich. To change your life, you have to push yourself to the end and trade the market with valid logic. If you feel confused with the risk management rules, use the 1% money management strategy and you will be perfectly safe. But don’t open multiple trades in this market since it will kill the basic rule of money management. Close a trade if you want to open a new position.