You recently shift4ed to your new home? After shifting, what is the first thing that you did? Let us guess. It is security, right? So, the first thing that you did after shifting to your new home was to ensure proper security so that no one can cause any harm to our valuable belongings and well as personal protection.
So, does the concept of security only apply to our home? No. it also applies in all aspects of your life like when you are on the road or in your office. That means, in trading security is an inevitable part and this is not something you should forget about.
If you are new to this investment field, then you should know that there are different kinds of traders based on their trading styles. To name a few, we have scalp traders, day traders, swing traders and many more. Each type of traders has distinct characteristics due to their differences in trading. For example, a scalp trader tends to trade in higher amounts of capital compared to day traders. Again, day trading is more liquid and volatile compared to scalp trading.
Therefore, the profits and losses also vary based on the type of trader you are. And that is why security is a vital part of trading management that helps one to protect their capital from losing trades. Know more about trading condition as it will give you added advantage in managing the risk. You might find this page useful since Saxo always offers high end education contents to the retail traders.
Man is to make mistakes. And, traders are no exception. So, it is very common for traders to make mistakes while trading. These mistakes can lead a trader to lose a big amount of capital. But losing capital is not good for the traders. Then what do they need to do?
They need to follow some steps to ensure the security of their trading capital.
The trading market is always uncertain and can be variable frequently. So, it’s not impossible to lose a winning trade within a blink of an eye.
So, our today’s topic will be about the reasons why you need to protect your valuable capital from losing trades.
1.Leverage
Leverage is the ratio of your owned capital and the loan provided by the broker to you for investment. Traders don’t always have a large amount of money to trade with. So, to encourage the traders to invest in trading, the brokers often provide them with leverage. The leverage can up to 1:50 based on the broker you are dealing with. Let’s say, you have $100 in your account and you took leverage of 1:30 from your broker. That means you get leverage of $3000 to invest in your trading.
Now the larger leverage you take, the larger is the probability of risk in your trading. That’s why, as a trader, you should keep in mind to not lose your assets to make more profits.
2.Stop loss point
Many traders use stop-loss points to prevent losing more money by closing a trade. However, you should also remain careful because there might be times when your stop loss might fail and you might potentially lose a large portion of your investment.
3. Think before you invest
Whenever you are investing in trading, think carefully whether the trade will remain on your side until the end. You may get a good deal to trade, however, you might not have the compatibility to do so. In such cases, it is wiser to prevent investing in that trading.
We tell our traders to always follow money management while trading. It helps traders to maintain capital security more properly.
Money management is a core concept that a trader should learn before starting his trading career. Money management is the process of yielding the highest profit to minimise expenditure systematically.
This concept tells one the need to form a budget, keeping a track of profit and loss for the maximum utilisation of money. In trading, it can help you to keep an account of the risk limits you take per trade. This technique will help you to refrain from excess expenses by enabling you to minimise your losses.
The trading market is always uncertain and can be variable frequently. So, it’s not impossible to lose a winning trade within a blink of an eye.
