Why do novice traders blow up their trading account?
Trading is one of the most complex professions in the world. Those who are making a profit, have strong analytical skills. They have spent years mastering the art of trading. You might be thinking that you know every bit of detail about this market but this is not all true. No one can learn everything from the scratch. Learning is a continuous process and you must get along with it. Now, the question comes, why do the novice traders keep on losing money? The majority of novice traders lose money since they don’t have the basic skills to deal with the market. Along with this, there are other variables that cause big trouble for the new investors.
Today, we are going to discuss some of the critical factors for which rookie traders are losing money. After reading this article, we expect that you will be able to protect your trading capital in a smart way.
Leverage of the trading account
Do you know leverage acts like double edge sword? Most novice traders start their career with the high leverage trading account. They think by using the leverage trading account, they will be able to make a big profit in this market. But this is not all true. In order to become a profitable trader, you must lower down the leverage. But when you will lower the leverage, your profit factor will decrease. However, you will be able to protect your capital. Since you won’t have access to the big lot trading environment, you will be taking the trades with managed risk, and thus making big losses will be very hard. And if you focus on the low leverage trading account, you might not even blow up the trading account.
Following the others
You should never follow professional traders blindly. It is another common reason for which novice traders are blowing up their trading account. You might think that there is nothing wrong to follow the elite traders at Saxo fx broker UAE but there is a small twist. Unless you use a copy trading service, you will definitely miss some of the important details followed by professional traders. Thus you will never learn the proper way to make a big profit in this market. Instead of following the other traders, it is better to learn the art of trading by doing the hard work. For that, you can download the demo trading platform from Saxo and learn about the important market details. Once you become good at analyzing the price movement in the demo environment, you may start trading in the real account.
Betting against the market
The novice traders love to go against the market. They tend to sell the asset at the top and buy the asset at the deep. But such a method is never profitable. If you truly believe trading is the right profession, you should go with the market trend. Learn to take the trades with the major trend. Focus on simple trading techniques so that you don’t have to deal with technical problems. Use the simple trend line tools to find reliable trade signals. If necessary, you may use the 100 periods moving average to determine the trend. If the slope is positive, expect a bullish trend. On the contrary, if the slope of the moving average is negative, you should be expecting a bearish trend.
Not believing in yourself
You must believe in yourself. No one can succeed unless they believe they can do a specific task like a true professional. So, train your mind and get prepared to deal with the major obstacles at trading. Once you master the key technique of trading, you should be able to make wise decisions and this will definitely give you a strong boost. But do not trade with high risk even though you might have extensive knowledge about this market. Follow a conservative technique to safeguard your investment.