Trading is not just placing an order for the best signal available. There are multiple considerations required for profitable trading. A trader must understand the ideas and learn to manage trades properly. He should try to lose the least possible for him. Otherwise, he would not have a decent career in this marketplace. Forex is hard for a trader when he is a novice. Less knowledge of signal analysis and control of the positions reduce the chance of profit from a trade. Instead, a trader loses capital which is very hard to accept. It even has a long-term effect on the mind of a trader. Continuous losses demotivate traders and reduce their chance of survival in Forex. That is why traders must understand the fundamentals associated with the trades. They must learn to secure the investment with risk management.
Traders must spend days researching risk management technique and preparing the best plans for it. It is necessary because traders experience a reduced load on their brains while market analyzing or managing risks. If you can reduce risks associated with trades, losing potential will reduce automatically. Moreover, you will have better management of stop-loss and take-profit.
Do not risk big position size
The idea of participating in the Forex marketplace is to stay focused and clever. Only a clear mind focuses better and does intelligent thinking because it is undisturbed. Moreover, a clear mind has better problem-solving capability than a disturbed one. A trader needs a clear brain to run his business in Forex. To have tranquility in your brain, you will need less distraction and disturbance. Simple position size helps in this department. It helps to reduce risks considerably. And with a fixed small lot size, every trade is executed at the best position. That’s why smart future traders at Saxo Bank keep the risk factors low in every trade.
When you are relaxed and concentrated in the trades, nothing can go wrong. Only the signals can turn against you. Even in that case, you will have faith in your stop-loss. As a result, you will close a trade with a decent loss. If you want to experience the trading business safely, try the small lot size and prepare a simple risk management plan with it.
Give time to improve trading mentality
Rookie traders mostly join Forex hearing of big profit margins. But they do not learn to trade. As a result, they fail to understand the market movement. If you do not understand market movement, you do not have market analysis knowledge. Then, you can never understand when to open or close a trade. Simple facts like following trend zones for stop-loss and take-profit will be unclear to you. Therefore, you will fail to gain profits from many executions. That is why almost every trading tutorial suggests a 1% lot size compared to the account balance.
If you want to save your account balance, a 1% lot size is right for it. For example, imagine you have $20,000 in your account. The idea of safe trading is setting up a fixed lot size for every trade. It has to be such an amount that does not bother the trader. So, your lot size must be $200. A rookie trader should opt for a smaller (0.1%) lot size. In that case, the lot size will be $20.
Simple trading strategy with simple lots
Small investments reduce the desire for profits. Therefore, traders do not aim for big profit margins from every signal. As a result, you follow a simple trading strategy like day trading for your business. Scalping is the most preferred strategy by novice traders where it is more mistake-prompting than day trading. A day trader looks at large time frame charts. So, a day trader has rare chances to place a trade in the market. It is not unpleasant as you can relax with fewer executed trades. If you maintain scalping, it will be a rush. You will also disappoint yourself with missed chances. Then, your patience will reduce over time. As a result, you will position trades at the wrong signals. So, simplify your trading career with a simple strategy and lot sizes.