Rookies in the trading business will always have tensions of losing their money. In the case of the traders who barely have any experience in trading, they are most likely to think about the profit potential of the business. But right after starting to trade the market, the concept will change. Because you will learn how it feels to trade the real market. From each trade, the traders will get new experiences and results.
According to a recent study more than 95 percent of traders are losing money. So it’s obvious, the rookies are inevitably going to lose their capital. But this doesn’t mean every trader will blow up their trading account. By following some simple strategies you can easily protect your trading capital. In this article, we are going to discuss some necessary concepts of ensuring money management is working to its full potential. With the best possible strategies, you can define the right control over the capital. At the same time, decent risk to profit margin can be ensured too.
Hold the excitement of earning profits
When you have no skills or knowledge on a certain topic, emotions tends to prevail strongly. That is why the novice traders think about the profit potentials from CFD trading business. After starting to trade the real market, they blow up the trading account. But most traders cannot effort to lose too much just to learn the process. They need some secure strategies to work with. To manage that, they have to control their excitement first. This is because disturbance from your emotions is prominent and it is not going to help you in real life trading.
You might think to risk 2% of your account balance at the initial stage but this is not how things work. You have to determine the risk exposure for each trade based on the quality of the trade setups and buy stocks at the right price. Emotions should never play a vital role and determine the lot size of risk factors in trading.
Developing your risk management policy
To run any business successfully, you need to think about risk management because it is a process to control all the costs associated with the system. But when it comes to Forex trading profession, things are little bit different. Here, you may not get the associated costs but the result of trading is highly dependent on money management skill. Think about following the same 2% risk management policy we mentioned earlier. The trading approaches will be much more subtle with simple market analysis. Your mindset will not hype for big profits. This will eventually help you to find high risk reward ratio trade setups. It helps you to trade with proper risk exposure without compromising the quality of your trades. Try to embrace the idea of quality over quantity for your business.
Strictly follow a certain strategy
While you are following the plans made by yourself, it has to be maintained strictly. Drifting apart from your trading edge is not so helpful for the business performance. Being a rookie trader in Hong Kong, your mentality can fall for any expert’s policies or strategies at any instant. Though the style may be the same as yours, executing the trades with a random strategy will end with poor results. You can still take opinions from others but with proper testing. Use the demo account to testify what you get from others. If it ends up effective, place the live trades accordingly. At the same time try to adapt yourself with new ideas or plans. This is because without acceptance, it is very hard to improvise or modify a particular edge of an individual.