A dream of every trader is to gain a fast and large profit. This is the main goal of trading. You choose a broker, get to know the platform and enter the market in order to win. But you must be prepared that a loss may also occur. It is not possible to win all the time. It is possible, however, to manage your risk in a way, that the balance in your account will grow and not diminish.
So the question is how to manage your risk to strengthen the chances of winning trades. Beneath, we give you answers to this inquiry.
Hedging is a strategy that creates an opportunity to turn a losing transaction into a winning one. It requires that you place the trades in an opposite direction to the previous one. If, for example, your long position lost, you should now open two short trades. This way, you may end up with a profit.
The rule of 1% suggests you invest no more than 1% of your capital in a single transaction. This allows you to protect your capital. Even if you lose, you will be able to cover it very fast. And trade has still potential to turn a good profit.
Set a stop loss
A stop loss is a great feature that allows you to avoid severe losses. It will automatically close the transaction at the predetermined stop loss level. Otherwise, you can watch the price falling in the hope it will rise again and you can end up losing a lot. Thus place a stop loss order whenever possible.
Take a break
Resist the urge to recover the loss right now. It is sometimes better to pause, stop for a day and come back the next day with a calm mind. Losing one transaction after another can lead to emotional trading and every trader knows that emotions are not good advisors. So include in your trading plan the number of transactions you can allow yourself to lose in a day and stop after that.
It is natural that you prefer to win than to lose. But the losses will happen. The prices in the market are dependent on many things and sometimes it is very challenging to predict their future direction. The best you can do is to minimise the losses. Always enter the market well prepared. Opening and closing transactions in the right time are crucial for having control over your capital.
Think about risk management and implement a strategy that suits your needs. It will help you not only protect the money you already have in the account but also work towards increasing them.
Many brokers offer a demo account completely for free. You receive virtual cash there so you do not have to worry about your money. Use it to try different approaches and see how the balance in the account changes. Apply in the live account what works best and start making a real profit.
Best of luck!