Everyone becomes greedy after seeing insane leverage. A leverage trading account is offered so that you can make a trade and earn a decent amount of money, even if you trade in a small account. But if you keep taking a high risk and trying to recover the losses without following the core concepts of trading, it will be a tough task to survive. The majority of traders don’t know the importance of following proper guidelines in trading. Eventually, they lose money and blame the market.
To be on the safe side, we will give you some powerful insights into this market. If you can follow these rules, you can expect to become a professional trader and manage loss in a very efficient way.
The risk to reward ratio
Setting up the right risk to reward ratio is the most important part of the trading business. If you want to survive as a currency trader, you must learn the trade with a high risk to reward ratio. Sadly, the rookies in Hong Kong are taking the trades with a negative risk to reward ratio. Some of the trades with high risk to reward ratios but soon cut the profitable trades before they hit the potential take profit level.
By doing so they impose a great level of threat to their career. The minimum risk to reward ratio for the trade should be 1:2. If you trade the market with such an approach, it will be an easy task to recover the losses.
Try to trade with the chart pattern
In the Forex trading industry, you must learn to trade with the major chart pattern. Without taking the trades with the help of a major chart pattern, it will be hard to overcome the losses. Things might seem hard but you can start with the continuation chart pattern. The chart pattern trading method is by far the most effective way to make a big profit without taking a high risk. Though it is a very complicated task you can learn this technique in the demo account.
Never try to trade the major news to secure big profits from the market. To ensure the safety of your trading capital, you must learn to take trades with discipline. Such an approach should be taken when you take trades in the major chart pattern trading method.
Avoid taking trades in the major news
You should not take any trade during the major news as it can cause big trouble. Those who are trying to make a big profit by taking the trades during the major news always lose money. Taking too much risk in each trying to earn a huge amount of money is not the perfect approach to becoming a millionaire. To survive as a currency trader, you have to focus on the core dynamics of the market.
Learn about the major news schedule and avoid taking the trades at that time. After you become confident with your trading approach, you will be able to make the right decision without having any trouble.
The trade which your comfort zone
Traders are always advised not to risk more than 2%. But we will tell you to trade within your comfort zone. If you take too much in the trades, you will be always under pressure. This will cause huge trouble and you might blow up the trading account. Being a new investor, you can risk only 1% of your account balance.
The profit factor will not be hampered if you can find a good trade setup. Try to trade with a 1:4+ risk to reward ratio so that you don’t have to lose too much money in the trading.
After you become skilled in analyzing the risk factor, you will slowly develop the confidence to trade with discipline. Stop chasing the Holy Grail and follow the steps in this article.