This Article will be about "Risk Management" and how to avoid risk to blowing up your account. Almost 90% of traders loose money and you know why? Thoese are just two things that make the diffrence between profitable trader and loosing trader:
Most of traders think that they know all, they know how to read a chart , how to draw/spot Support/Resistance zones, they know how to use indicators. But thoese are things that anybody can learn. But to be honest "Risk Managament Strategy" is something that you couldn't imagine when you come into the traiding.
Most of new traders started their traiding journey because they readed article or wathced "Youtube" video about one guy who had 1000$ account and after 6 months he turned it into 100000$ account. We all have been seen these video testimonials. But there is one thing that they don't say, "That they are extremely lucky", if we assuming they're even telling the truth.
The number one job as a trader is to protect your risk.
You probably know that every trade that you take , you cannot risk more than 5% of your account value(5% trades are risky). For beginners I suggest to take 1% trades and no more for the start. I know it doesn't sounds a lot , but this strategy will keep you in the game much longer. It helps with your psychology because you're not risking massive amounts of your capital and you will know that with 1% strategy you will not blow your account.
Most of new traders blow their account because of the greed. They will do 10%, 20% per trade, some time they even take much more higher risks. And all that because of "Get Rich Quick". Let's imagine you lose 10% trade , now you need to gain 11 percent to get that 10% back and from this point everything expands. You probably will take much more trades and with higher risks just to get back. But we all know:"deeper you go in the hole the worse it gets".
Thoese traders who take 1% per trade, don't jump in and make sudden moves of the market. They don't look at the chart all the time, they do their homework, they have traiding plan for the day and they stick to it.
For the starts don't take more than 1% per trade, it will help you a lot. And you will learn more. You will know when you will be ready to take the risk.