Building up a decent online trading account takes both time and money. Once you’ve had sufficient training and experience through a demo account, you will need to look into the risks and money management of your active trading account.
It is all too easy to risk several successful returns on a single trade and lose all your progress. Your online broker should have a good understanding of risk management. They can help you regulate your money.
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Plan Your Risk Assessment Ahead of Time
You may not want the same risk limit for every trade. Some trades are more secure than others, allowing you to risk a bit more than with a less assured trade.
Your online broker can give you some guidance on what level of risk you may want to take. Most professional traders only risk between 0.5% and 2% of their total account on a single trade. For trades that seem a bit unsure, they would aim closer to 0.5% while other trades may be worth risking 2%.
This limit on your account will help you avoid significant losses on a bad trade. Less experienced traders may risk 20% on a trade and lose a huge amount of money without any means of replacing it.
High Risks Cause Stress
Even if you succeed quite often, high-risk trades are always stressful. The thought that you may lose that much money at any stage of the trade will be in the back of your mind until the trade is complete. Making high-risk trades all the time will have an impact on your stress levels. As we all know, a stressed mind makes bad choices!
These are the reasons why you should discuss risk and money management with your online broker. Remember, customer support and services are always there to help you out. The whole point of an online broker is so that you will feel supported and secure in your online trading. Make use of that!
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Good luck and happy trading!
