Trading Strategies

7 Ways Not To Blow Up Your Trading Account

So there is no one magic formula that works in the markets every time. We often see some of our pro traders being on the opposite sides of our trades. The volatility in the markets mean that we can both sell and buy the same side of a trade and make money.

BUT other than our pro traders, 90%+ of traders lose and out of those who lose, many traders lose everything and “blow up”. I know traders in far too many other chatrooms who have lost 50% or even 100% of their money on just one or two trades due to flaws with their approach and that just isn’t right. Trading doesn’t have to be like that if you have the proper mindset and risk management in place.

Always has been and always will be CUT LOSSES QUICKLY.
How does this happen? Green, Red, Stubborn. That is how it happens. Why does this happen? It’s psychological. A trader gets a bit of profit and then becomes attached to the profit. So when it goes red they feel like they have been cheated or robbed. Many studies show that people will go out of their way to gain back something they feel they have lost even if they would not go to the same lengths to obtain the same thing they never had in the first place. That’s how small losses can turn into big ones quickly. Simply exit the trade when it stops going in the direction you wanted and place your stop. No really PLACE YOUR STOP.

DON’T GO ALL IN
Where does that phrase come from? Vegas. Vegas is for entertainment not for making money. IF you do actually GO ALL IN your simply gambling. Gambling is a sure fire way to blow up your account. NO matter how sure you are on any trade anything can happen and if anything can happen then it surely will. Maybe not today maybe not tomorrow but sometime soon and when it does don’t be ALL IN or you will BLOW UP. Sure this means it will take longer to build your bank but at least you will have a bank in two years. There is plenty time to use bigger point sizes when you have a financial cushion.

AIM FOR SINGLES, NOT A SIX
Obviously it’s more fun to try to find a huge winner than a small winner, but we always aim to make 1%, 2%, 3% gain at a time, we NEVER aim to make 10%, 20% or 50% like too many newbies and gambling types do, usually missing their mark and not learning to take singles over and over and over again instead of going for six and being bowled out. The cool thing is that if you aim small and miss small, sometimes you will hit the occasional six just by being so dead on with a trade.

THE MARKET IS NOT ALWAYS RATIONAL SO ACCEPT IT
So even if in the end you are proven right, why risk blowing up and losing everything just so your ego can feel better? There’s a famous Wall Street quote that says the markets can remain irrational longer than you can remain solvent and this holds true for both buys and sells. All time highs and higher highs are far more common than you think. Never lose track of proper risk management on your position. Come out of the trade if it isn’t working.

UNDERSTAND THE MARKET IS COMPLEX WITH MULTIPLE INDICATORS INTERACTING AT ALL TIMES
And once you do that no longer will you question or whine about why the market doesn’t do what you want even though your favourite indicator or pattern is setting up perfectly but still the market goes against you. Listen to our analysis and over time you will develop a resilience and understand when your indicators are strong or weak.

STICK TO PATTERNS WITH A HISTORY OF SUCCESS
After over two decades of experience in the markets we only ever teach setups that have a long-standing history of success AND that will exist for a long time to come as they are all based on market inefficiencies.

NEVER SAY NEVER is not just a saying BUT a great way to stay safe in trading as ANYTHING can happen and the sooner you realize that the safer you’ll be. (Tweet this)

I can’t tell you how many newbie traders blew up or risked blowing up on a sure-fire trade that has come in 24 times out of 27 it’s that one or two times that will blow up your account and just know it is coming.

Good Luck! and remember just DON’T MAKE A FATAL MISTAKE.


Magnetic Trading

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“At Magnetic Trading, we believe in Transparent Trading” "With over 30-years experience in the markets we trade real money every day in front of our clients."

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