4 Ways to Avoid Blowing up Your Trading Account

Getting access to the online trading industry is very easy. But when it comes to surviving, the majority of UK traders fail. People start to trade the real market without having a basic knowledge of trading. They are taking an unnecessary risk since they think trading is the shortcut way to become the ultimate millionaire. But things are not so easy when you start your career in the investment business. You have to improve your mentality and develop strong analytical skills to speculate about the price movement. Even after doing all the hard work, you might find it hard to protect your investment. For this reason, we are going to dedicate this article to pointing out a few major tactics that can help you to protect your trading capital.

Saving your trading fund is not that hard. Surprisingly, all new traders make things super complicated. So, what are the key factors that drive new traders nuts? The problem is a lack of knowledge and discipline. Read the tips in this article if you truly want to stop blowing up the trading account.

Develop your skills

The first thing that you need to work on is your skills. Those who have strong analytical skills can easily filter out the false trade setups. They have the unique ability to improvise. Start learning about the technical analysis since it is the most basic part of the market analysis. Create a demo account with a reputed broker like Saxo and try to test different trading methods. Analyze the technical data and try to speculate the direction of the trend. Once you can find the direction of the trend focus on the major news. By assessing the high impact news, you can easily find high-quality trades and make a profit even in the volatile market condition.

Find a well-reputed broker

One of the key reasons why naïve UK traders are blowing up the trading account is because of a faulty trading environment. Try to find elite brokers like Saxo capital markets so that you don’t have to worry about the trading environment. Unless you are analyzing the data in a premium trading platform, you are not going to achieve perfection in each trade. Even a few pips gap in the price pattern of a candlestick formation can change the course of the trend. The institutional traders often spend thousands of dollars just to have access to the best trading tools. Focus on your trading environment and you won't have to blow up the trading account.

Use 1% risk in each trade

Taking too much risk is another key reason why you can lose your trading capital. You need to trade the market with low risk so that you don't become frustrated after losing a few trades. Instead of using the 2% rule, stick to a 1% risk management policy for the first year. Make sure you are winning at twice the amount you risk in any trade. Unless you do so, recovering from the losing trades will be hard and it will be nearly impossible to make big profits from this market. So, work on your risk management plan from the start of your career.

Use a low leverage trading account

You must use a low leverage trading account. Trading with a high leverage trading account often results in a big loss since the traders often trade with emotions. Taking an emotional approach at trading and taking high risk always results in disaster. But if you start using a low leverage account, you won't be able to open big volume trade even if you intend to. The broker will stop you from taking a high risk in each trade. Stop thinking about the profit potential since you won't be able to trade with a big lot. If you can stay in this game, you won't have trouble making a profit.