You might think trading is one of the most profitable businesses in the world. But the success rate in this business is very low. Does this mean trading is not for the retail traders? You can trade the forest market like any professional trader but for that, you must have the proper knowledge of risk management policy. Unless you follow some basic rules, things will be very hard and you might even blow up the trading account. In this article, we are going to talk about some of the common reason for which retail traders are blowing up their trading account.
Taking too much risk
Taking too much risk is one of the most common reasons for blowing up the trading account. The Rookie traders don’t want to follow the conservative trading method. They want to earn more money by taking big volume trades. But if you look at the professional traders in Hong Kong you will understand why they can make a consistent profit without blowing up the trading account. You need to follow their footsteps to protect your trading capital from big losses. Always remember you need to reduce the risk to 1% or else you might blow up the trading account in less than 3 months.
Trading against the major trend
If you want to survive in the Forex market, you must learn to trade the trading. Trading against the major trend is one of the key reasons for blowing up the trading account. Being a new trader, try to trade the higher time frame since it gives you more accurate data. Things might be challenging at the initial stage but once you learn to trade the major trend you can expect to make a big profit.
Stop overtrading the market
Overtrading is one of the key reasons to have tough times in trading. If you want to protect your trading capital from a big loss, you must focus on quality trade execution. Follow the conservative trading method since it is one of the most efficient ways to make a profit. Never think you can change your life by pushing yourself to the limit.
Trading with emotions
You must learn to trade the market without any emotions. Taking emotional trades might result in emotions. Unless you learn to control your emotions, you should never try to become a professional trader. The professional trader knows the importance of a disciplined approach in trading. You must follow the rules all the time, or you will become an emotional trader. Taking steps with emotions will always result in a big loss.
Trading with the low-end broker
If you trade the market with a low-end broker, you might lose big money. You should always trade the market with a premium brokerage firm like Saxo since they always care about their clients. The unregulated broker might even scam you. Things are not as hard as it seems at the initial stage. But once you learn to trade this market with the high-end broker, you can feel confident.
Trading the major news
Trading the major news is one of the key reason for which the naïve traders loses money at trading. Unless you learn the perfect way to analyze the high impact news, you should never try to trade the major news. It’s better to stay in the sideline rather than losing money on low-quality trades. However, you can start trading the major news once you get skilled at technical analysis. But make sure you learn to trade the news by using a demo account.
Conclusion
You should always think about the safety of your investment. If you trade this market with high risk, you might not be able to secure consistent profit. Think about the conservative trading technique and try to improve your skills by following the basic investment rules.
