The use of small trading account often becomes the prime cause for losing money. Novice investors tend to overcome the problem associated with inadequate capital by using the leverage factor. The risk increases the risk factors in every trade with the help of the leveraged account and tries to increase their account balance. By doing so, they develop some deadly habits. For instance, they learn to trade the market with aggressive steps which is one of the prime reasons for losing money in the trading profession.
In this article, we are going to give you four simple rules which will allow you to trade the market in an effective way. Go through this article very carefully as we will disclose some of the secrets used by professional traders.
Keep the leverage low
You may trade the market with a high leverage account provide that you have a big sum of money. But if you intend to trade with the small capital, you should never trade with high leverage. By getting the excessive buying and selling power, you will slowly learn to trade by breaking the rules of money management. So, to protect your trading capital, you must find a simple way by which you can lower down the leverage in the trading industry. If you manage to keep the risk factors low in every trade, it will become an easy task to make significant progress in your life. Moreover, you won’t be able to trade with a big lot and thus your small capital will be safe.
Learn to use tight stop loss
You should master a price action trading strategy to trade with the small capital. By doing so, you will be able to trade the market with a tight stop loss. Browse this site and learn more about the conservative trading approach at trading. As you become skilled in doing the data analysis based on the candlestick patterns, you will be able to reduce the stop loss in every trade. Thus you can increase the lot size without increasing your risk exposure. Whoever, studying the important price action confirmation signal is not that easy. You may have to spend few months in the demo trading account to learn the basics of price action trading strategy. But once you learn this technique, you will appreciate us for giving you these amazing tips.
Stick to the trend
As you have a very small capital, you do not have room to make silly mistakes. A few mistakes can wipe out your entire trading capital. So, you can clearly understand that you have to take the trades with high accuracy. For that, you have to learn about the trend trading strategy. Once you become good at analyzing the major trend in the market, you will become strong confident with your actions. Moreover, you will be able to protect your trading capital in a structured way. Never expect that you know every bit of detail about the market. Stick to the core trend and try to find a safe way to make a regular profit. Stop following the reversal trading method as the success rate is not that great.
Avoid trading the news
News factors are the most important elements that cause crazy volatility in the market. As a new trader, you should learn about the economic news calendar and find a simple way to manage your trades in a structured way. Never expect to make a big profit by taking the trades during the news hours. In fact, if you do so, you may have to experience heavy slippage and thus you will be losing a significant portion of the capital even after following proper risk management techniques. Try to find stable hours during a specific trading session and execute the trades at that moment. Once you follow this technique, you will never have to worry about big losses in your trading profession.