Anyone can access the options trading market. Trading the financial asset is no longer limited to the large banks and institutions due to significant advancements in technology. The brokerage firms are offering professional trading accounts to the retail traders so that they can take their trades in a standard way with the help of a computer or smart device. Having easy access to the global trading industry doesn’t mean you will be making tons of money. You need to know the proper way to protect your trading capital or else things are going to be very tough.
As a trader, protecting your trading capital should be your top priority. Unless you know the perfect way to protect your trading capital, you will never succeed as a retail trader. Now pay close attention to the contents as we will give you some amazing tips which will allow you to protect your trading capital.
Lower your expectations
You should never have high expectations in the trading profession. If you take the trades with aggressive methods and set high expectations, you will no longer follow the basic rules. You will take big lot trades and expect to make a big profit. In fact, some novice traders often think that they can become a millionaire by trading in the market within a few months. Such expectations usually lead to big losses and the traders become frustrated after blowing up their accounts. To avoid such complications in the trading profession, you must learn to set low expectations for this profession.
Choosing a low-end platform
Smart traders never trade the market with low-end tools. They are willing to invest a decent amount of money just to gain access to the premium trading platform. At the initial stage, you might be thinking that opening a trading account with a high-end broker will be costly but look at this site. You will be surprised to see the service offered by Saxo. If you compare their pricing with some of the average and low-class brokers, you will see that the low-end brokers have many hidden fees. Most importantly, you won’t be able to do the data analysis properly and thus you will keep on losing money most of the time. So, choose your broker carefully as it will enhance your capital safety.
Trade with a good strategy
To survive in the options trading industry, you must be trading the market with a professional trading strategy. Without having access to a professional trading method, you will never learn to execute high-quality trades. Most rookie traders use the random trading method and lose money. On the contrary, the elite traders focus on a precise approach and take their trades in a very strategic way. They use a smart approach and trade the market with strong confidence. To ensure the safety of your trading capital, we strongly recommend that you develop a professional trading strategy from the start. Once you do that, you will become more confident and lose fewer trades.
Use famous 2% rule
Those who are trading the options market for a few months must have heard about the famous 2% rule. This means risking only 2% of your account balance in each trade. While trading the market, you will often break the rules and trade with high risk. Since no one knows the outcome of the trades, taking more than 2% risk in the trades usually increases the risk exposure and forces retail traders to lose a big portion of their capital. Even if you face a few losing trades in a row, you should not break this rule. If possible, reduce the risk to 1% in each trade. Limit your trade entry so that you don’t have to overtrade the market. Once you gain control over your trade execution process, you can safely trade the market.