Online trading business has become hugely popular in today’s world. Many people have changed their lives just by learning to take trades in the Forex market. But if you take a look at the top traders in the world, you will notice all of them have used a simple concept. They are very good at managing the risk factors. If you want to stay safe and protect your trading capital, you must learn to take the trade with low risk. But this is not going to save you from the wild swings of the market. To stay protected, you have to use some professional tips. In this article, we will give you four tips that can help you protect your trading capital.
Adjust your leverage based on market condition
We are not asking you to trade in a low leverage account. When the market condition is stable you can increase the leverage so that you can trade with a tight stop and big volume. But if the market condition is not stable, you should reduce the leverage and trade with low risk. This dynamic adjustment of the leverage helps you to make a profit by taking advantage of the market condition. Though it might be hectic to the new trader it is the only way by which you can deal with the leverage.
Some of you might say, you will use a low leverage account and conservatively trade the market. This is fine but this eventually pushes the traders to over trade. Once you start overtrading the market, it is very hard to overcome the losses. You will become addicted to this market and soon you will blow up your trading account.
Get the best education
You should learn in the same way as the professional traders in Singapore do. Look online for ETF education and try to learn from the best sites. If you visit Saxo broker’s website you can use their free online resource and learn a lot about their trading industry. After you become skilled at analyzing the market data, you will slowly learn to take the trade managed risk. This will help you to improve your skills in the long run. But when you learn the art of trading, don’t become too greedy to earn them more money. You have to learn the key steps with patience. If you look for shortcuts, you will lose everything.
There is no shortcut in the investment business. You have to follow the traditional way of learning and take the trades in the demo account. This will help you to improve your skills and you will become a better trader.
Trade with less than 1% risk
Everyone talks about the famous 2% rule. But it doesn’t work at all. If you take 10 trades with a 2% risk and lose all of them, you will lose 20% of the account balance. Considering the safety of your trading capital, it is safe to assume, that you will take 2-3 trades per day. So the maximum risk you should take per trade should never exceed 1% of the account balance. If you trade with more than 1% risk it will be very hard to overcome the losses at trading. Most importantly, you will become frustrated with the losing trades.
Have faith in your trading system
You must have strong faith in your trading system. Those who don’t faith in the trading system are losing money at the time. They don’t know the proper way to curate the trade and lose money. You have to back-test your trading method and see if it works. If the system work, you should not break the rules when you face a series of losing trades. Stick to the system and it will protect your capital.