Tag: Account Protection

Categories
Forex Risk Management

The Best Ways To Keep Your Forex Account Safe

Keeping your account safe is the number one rule when it comes to trading, there are plenty of different ways that you are able to do this. Many of which you may have come across and may seem quite obvious, some others may be a little more secret. So let’s take a look at what […]

Keeping your account safe is the number one rule when it comes to trading, there are plenty of different ways that you are able to do this. Many of which you may have come across and may seem quite obvious, some others may be a little more secret. So let’s take a look at what […]

Keeping your account safe is the number one rule when it comes to trading, there are plenty of different ways that you are able to do this. Many of which you may have come across and may seem quite obvious, some others may be a little more secret.

So let’s take a look at what sorts of things you can do to help keep your account safe.

Reducing lot sizes: One of the main ways that you can dramatically reduce the risk to your account is to reduce the trade sizes that you are trading. If you are trading at 0.05 lots then reducing down to 0.03 lots or 0.02 lots will dramatically reduce the amount of risk that there is on your account. Not only does each trade now offer less risk should the markets move against you, but when a trade hits your stop loss it will be taking out a smaller chunk of your account. It could also enable you to place additional trades without increasing your overall positions and margin being used.

Making fewer trades: Sometimes we like to put on a lot of trades, especially if the current market conditions make it easy to put some trades on, the problem is that with each additional trade that you put in, you are risking more of your account and putting more of your equity into the active markets. In order to reduce the risk, you should try to place slightly fewer trades at a time, the fewer trades the less risk that there is.

Alter your strategy: If your strategy is causing you to open a lot of trades, then either it is a high-frequency strategy that can be quite risky to an account or your entry requirements are quite loose. One way to get around this is to add in some additional or tighten up the current entry requirements. This will make each trade a lot more specific and the strategy will end up owning fewer trades at a time.

Don’t copy others: It can be easy to get dragged into the idea of copying someone else as they trade, they are doing all the hard work of trading right? So why would I bother doing all of this work when I can just use theirs? It sounds great on paper, but unfortunately in the real world, it doesn’t always work out so great. When you copy their trade, do you know why they made that trade? Probably not, in fact, you have no way of knowing if even they know why they made that trade. If things go wrong, you do not know how to correct them and so you are pretty much risking your money on something that someone else has said, not really something you should be doing.

Take breaks: This won’t directly affect the risk on your account for the individual trades that you put on, but it will help reduce the risk of you making a mistake or placing too many trades. When we become tired or stressed, our decision-making skills all seem to fly out the window. So taking regular breaks in order to relax and clear your mind is important, not only is it healthy for you but having a calmer mind means that when you come back to make some decisions on what you need to trade, it will be easier to follow your trading plan and you won’t start to take shortcuts due to frustrations that were building. SO take regular breaks, they help you in more ways than one.

So those are a few of the ways that you are able to help reduce the risk to your account, of course, there are other things that you can do. Just remember that risk management is one of the most important parts of a trading plan so being able to reduce the risk is paramount to an account remaining successful.

Categories
Forex Psychology

Psychology That Will Blow Your Trading Account

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account. So […]

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account. So […]

Psychology is a major part of Forex trading, Forex comes with ups and downs and as a new trader, some of these downs can drag your trading down with it, we have looked at a number of different psychological holes that traders can fall into, ones that can potentially make you blow your account.

So out the first pitfall is for those people who want to trade forex for the simple reason, to get rich as quickly as possible. Sadly, this is the view of Forex that a lot of people have, mainly because of all those people of social media such as Instagram that are posting their fast cars and million-dollar houses, in case you didn’t know, none of it is real. They do not have this money, they do not own those cars, they have either taken pictures from other people or have rented them for the purpose of the videos, all they want to do it suck people into their affiliate programs. So the mentality that people see and gain fro these is that you can use Forex to get mega-rich, mega quick.

Forex is a long learning process, it can make you rich, but that will be years and years down the line, not within a week. Get that idea out of the mind, you need to treat it like a business, risk management, small profits, and slowly growing.

Are you afraid of losing? Much newer, especially younger traders have the idea in their mind that losing is negative, anything that makes your money go down is bad, but is it really Losses are often seen as the best way to learn, but that mentality is hard to put into someone that has been brought up being told to save their money and to avoid risks. You are going to lose, it is a part of trading, being able to understand that will help put the thoughts of a loss being bad out of your mind and will allow you to adapt rather than sitting in fear.

Do not fight the markets, you won’t always be right and the markets will try to hurt you at times, that is just the sort of asshole it is, knowing when you have been wrong is vital and so is getting out. When your strategy dictates a stop loss at a certain point leave it there, if the markets start moving against you, many newer traders will still believe that their trade was correct so they move the stop loss further down, and then further, and further again because they know the markets will turn in their favor. In the end, it continues down and the stop loss is 5 times large than it was meant to be, it triggers and most of the account has gone. Stick to your original plans, don’t alter them mid-way through as this will only lead to more losses.

A lack of discipline can cause accounts to blow and it is most likely the one that has blown the most. Having discipline means being able to stick to your trading strategy no matter what is happening within the markets or how past results have gone. Many traders when they make a loss will want to get that money back, they do this by increasing the size of the next trade, bad idea, this is known as a Martingale strategy that has blown thousands of accounts in the past. Another thing that undisciplined people do it to leave their perfectly good strategy because it has a few losses, those losses will come no matter what your strategy is, so you need to stick with it and accept some of the losses.

Are you guilty of any of these pitfalls? Take a look at tour past and see if you are or have been, getting them out of your mind is a fantastic step to becoming a successful trader.