Losing money in the Forex market is very common for rookie traders. The new investors start to trade the market without having any precise knowledge. They simply execute trades based on emotions and lose their entire investment within a short period of time. If you truly intend to become a successful trader, you must push yourself to the edge. Most importantly, you need to have complete control over the trades. According to recent statistics, more than 95% of the retail traders are losing money. So, it’s very obvious trading is one of the most difficult tasks for retail traders.
Though the associated risk factors in currency trading business are extremely high, the smart traders in Hong Kong are making consistent profit by profit. Most importantly, they know the essential factors which can protect their trading capital. According to Saxo, the essential factors are:
- Proper knowledge
- Control over emotions
- Proper money management
In order to make a decent living from trading, you must learn to trade the market in the demo accounts. Some of the rookie traders often find it extremely boring, and they start with real money. But if you do so, you are likely to blow your trading account within a few months. First of all, try to learn about the three major parameters of this market. Learning the technical details is fairly easy, but when dealing with the fundamental factors is the most complex task. Technical factors will allow you to find good trade setups, but the fundamental factors will help you ride the long term market trend. Without knowing the details of trend trading strategy, you will always have to lose money.
Control over emotions
Controlling your emotions is one of the most difficult tasks in the Forex trading industry. If you look at the experienced trader at Saxo, you will never see them trading the market with emotions. Instead of trading the market in the lower time frame, try to focus on the higher time frame data. As a full-time trader, you understand how this market works. Never think you can earn huge amounts of money without doing the proper work. Try to create a simple trading strategy so that you can make a profit in any market condition. Being a novice trader, you should also learn a lot about this market. The more you read, the better you will understand this market. Stop thinking about quick profit in the trading business. Try to create a balanced trading strategy so that you can make a profit using simple logic.
Proper money management
Managing your trades is one of the easiest ways to protect your trading capital. The retail traders are losing money on a regular basis since they always take a huge risk in each trade. No matter how well you understand the market, never risk more than 1% of your account balance. Never think you will limit your profit factors by taking a small risk in each trade. If you manage to find a high-risk reward trade setups, you won’t have to think about your profit factors. Never trade the lower time frame to find more trades. Try to be a position trader since it will significantly decrease your risk.
Managing the risk factors is not all hard. Sadly the new traders always make things complex with a hope to make more money. You need to consider the long term goals to make a profit. Read more about the basic details of the Forex market. If possible, try to find a reputed trader who will give you clear guidelines about this market. If necessary, invest some money in learning from the experienced traders. Without having a proper guideline, it will take time to learn the perfect method to protect your trading capital. So, start working hard to create a perfect trading system.