WHY DO YOU NEED TO PROTECT YOUR FOREX ACCOUNT? AND HOW?
If you are a beginner, or still looking for a way to make money with Forex, the balance in your account is the most important thing. Remember this carefully.
Trading skills, trading psychology, trading tactics, … whether there is any meaning, once you do not have money to participate?
In the early days, in addition to trying to train and learn how to read the market to make money from it, you also need to really focus on keeping the money in your account. You need to learn how to survive on the battlefield before you think about becoming an officer or a general later.
What’s happening is the fact that new entrants, very quickly burn (a few) of their accounts, with delusions (and great drawings) about making money quickly, overnight with trading. Forex. They kept burning, burning and over the years gradually gaining experience: they had very little money.
In this article, I want you to really understand the importance of protecting your account, about the amount of money in your account, and suggest a few ways to do it, keeping you alive in the fight with The time is long enough, to gradually become a successful trader later.
Can you and your trading account last long enough?
If you spend a lot of time and seriously observing and assessing the market, gradually everything you see will have a “meaning” to it. You can even see the psychology of other people, see the activities that I still compare to “fighting” on the charts, … At this point, you begin to see the market like a professional trader. However, as I wrote above, everything is meaningless if you … don’t have money.
Imagine, a person decided to go skydiving. They go on board the plane, when the door is open, they skydive because they simply like skydiving. In connection with forex trading, if you enter the market without being prepared with knowledge, without being warned about mistakes or mistakes, do not tell anyone in the face that it is in fact how, … you and that skydiver all come to the same action: suicide. And every day, I see too many people committing suicide in the market.
For many reasons, most traders are not aware that, in order to become a successful trader – make a lot of money in the long run, they first need to have money to trade. They just kept hitting big, just like that they like to trade bluff every day dozens of orders, …
Think of your trading account as a ticket to enter the market. If you don’t have a ticket, there’s no market for you to play. You need to be really careful every time you decide to risk the coins in your account into one trading order. Running out of money, it means that your forex trading career will be over.
So what should you risk?
Here I will not mention the risk amount or the% account for each of your trades. I will tell you that, in the early days of learning and trying forex trading with real money, make sure your account will be enough to cover at least 50 trading orders.
Remember and understand, the first thing you need is: to exist. It should also be the only thing you need to do, before thinking about making a profit. Are you new?
The longer you exist, the more you learn. Recalculate the amount of money you have, the income you have, your willingness to throw away your money, your monthly expenses, etc., and decide for yourself how much you can risk. . You should determine from the beginning that you will lose, because you do not have the knowledge, you do not have trading skills, you have not read – understand the market, you have not controlled yourself, … there are a hundred what you haven’t.
Underestimate these things, you will burn countless accounts. You think it is tuition, it is indeed tuition, but we can control the amount of tuition. Investing in foreign exchange trading requires a specific method and discipline, you need to follow the plan for your trading account (willing to lose how much money for a month, how much money for one year of transaction). Most importantly, absolutely do not borrow forex trading, or trading for a greater amount than you can bear.
Don’t run out of ammo, you need to plan for a long battle
You should use such a strategy to trade. Forex trading is no different from a real battle every day, how many people come in, how many people fall. Some people become major generals, some people never go back.
This war can last for decades, the market will always be there tomorrow. Therefore, you need to prepare and plan for a long way, you need to make money but it must be for a long time. A successful month, a successful year, does not say much. You absolutely can be empty-handed within a week, if you lose control.
If you run out of ammo, you cannot fight. If your account runs out of money, you cannot trade. If your account does not have a lot of money, you cannot hit big in important battles, high probability opportunities, when wasting ammunition on uncertain opportunities, opportunities that are like “one day” a few dozen orders ”.
Trade small orders first
For those who are new or still not confident in trading ability, no matter how small or small the size of the trade you are trading daily, no matter how comfortable you are with the amount of losses, reduce it. they are in half.
If you lose 10 positions in a row, will your account remain available? Do you have any cash in reserve to continue recharging?
You can set a safe or risky stop loss, while keeping the same amount of risk, just by changing the size of the order. For example, you can trade 2 lots with the risk-loss cut-off of A, the amount you lose if the stop-loss order is equivalent to trading 1lot with the safe (-) stop-loss point of 2A. You can think of a pinbar candle image, the risk-loss cut-off is 1/2 pinbar, the safer cut-off is on the pinbar. Don’t forget to keep the winning order for a long time, let the winner run.
It would be wise for you to be new to this market, trade with really small orders, and gradually increase the size in proportion to the trading skills you have learned.
Make transactions smarter
You should only bet when you have strong, really strong pairs. Only point at orders when you see price movements with a high probability of winning, movements that you particularly trust because you have won many times in the past.
Know your strengths, stick to it, trust it (do not take a profit).
Forex trading is a game of defense, you hold your account tightly, observe – observe – and observe. Only when you see a very good opportunity to eat, or see a lump of money placed right in front of you, will you risk taking your hands holding your account out to reach. Buffett’s principle is: never lose money. Because of losing money, what do you want to play?
Never dream of a shortcut (because it doesn’t exist), don’t believe what they – people who want to take your money, draw. What is the reality? In fact, most participants lost money. The fact that you need to always protect your account, not every day, swinging dozens of orders for uncertain opportunities.
Do not let your confidence hurt you
Suppose you have a series of very good winning orders. But this is also the time when you need to pay special attention to calm down and be more careful. This is not easy at all, believe me.
When you find yourself feeling very confident, try to bring yourself back to a neutral state. This is the time when big losers appear.
Do not be impatient to hit big when a candle setup has a high probability of winning that you are confident, all orders have two possibilities: win – lose. Never be confident but want to prove you must be right with Mr. Market. And you need to be especially careful, when there is a series of winning orders – there is a big losing order – and what happens after that. If you are a long-time trader, you will understand what I am trying to say. If you are new, I will warn you: it is the losing order, which can bring down an account.
Only trade orders with a high risk / reward ratio
If you want to protect your account, you need to trade orders with a good risk / return ratio. That is, you need winning orders to pay for at least one and a half to two losing orders.
If the amount you lose on a losing order is more than the amount you lose in a winning order, then it is difficult for you to make a profit in the long run or the short term.
A person who deals with a good risk / reward ratio can make a lot of money even if he loses 6/10 trades.
Do you see the market often going much further than you think? Who thinks bitcoin can go up to $ 20,000 for a bitcoin? Who thought that in 2007-2008 Vietnam’s stock market could go down that deep? So if your order is on the right track and profitable, PLEASE FEEL it to keep it profitable and achieve a very high risk / reward ratio. And with a win order, you will have enough money to pay for many losing orders, and protect your account firmly.
When it comes to the long-term success of forex trading, the most important factor is: account protection. There were a lot of people who wasted their “ammunition” in the early days, when they were still in the dark, so there was not much money left to participate in the big battles when they were somewhat accumulated experience. and skills. Even earlier, many people took a no go back, arguing that forex trading is a scam.
As soon as you start opening a real account to trade real money with forex, you need to be especially careful because your emotions are never as high as they are now, never when your expectations are that big, Your money has never been so vulnerable to loss.
If you don’t believe what I say, read a lot about the top individuals in the field, find common ground in their thoughts, record what they say the same and experience for themselves. And hit small, really small, … to experience.
If you believe, please practice what I share. Because they will save you a lot of money, will shorten your time to explore misery, will put you on the right path to success with forex trading in the long term.
Because it is not important to go fast or slow, it is important that we walk the right way.
Summary: Viet Elliott