1. USE STOP LOSS COMMAND

The only way to help you avoid major risks in trading is to use stop-loss command. Your stop loss will ensure you only lose at a certain limit, which was determined by you before entering the command.


When you trade without using a stop loss the consequences are hard to imagine. Financial markets are unpredictable, so it's best to use your stop loss to take care of your account before thinking about making a profit.

2. PAY ATTENTION TO SITUATIONS SUCH AS GAPS, SPREADS, ETC.

These are the things that often come up in trading. Whether gap jumping or spread can bring you significant trading risks.


Gap jumps and spreads can happen for a variety of reasons, be it important news, or unexpected news. You should review past price history how these situations occurred and how price action was. And arguably the best way to prevent this from happening is to put your stop loss on.

3. UNDERSTAND THE MARKET IN WHICH YOU TRADE

This is also very important in managing your capital. If you understand the market in which you trade, there will be times when you are proactive in your capital management plan.

The things you need to know can be:

  • The way the price moves
  • Price volatility
  • Influence with news like?
  • What are the spreads and spreads on news?
  • ….

Understanding the market you participate in will help you partially develop a more suitable capital management plan, be proactive in trading, and grasp price fluctuations will help you place stop losses more effectively.




4. DEVELOP A TRADING STRATEGY

Many traders lose money because their trading strategy is too sketchy or they actually don't have a really quality strategy. Thus, when losing money, you easily fall into the psychology that makes your trading process difficult to be effective.

Building a trading strategy helps you to understand what your entry point, stop loss, and take profit is based on. You understand the risks of the strategy and accept it. At the same time, it helps you limit psychology when trading.




5. KNOW WHEN THE STRATEGY FAILS

Successful traders often say that the lessons from losing strategies will help you improve in trading. So the loss is not something we should be afraid of, but we should understand it is about helping us to improve ourselves in the future.

It is important to know when to accept yourself wrong and decisively exit and exit the market. Instead of waiting for the market to come back, losses soon disappear. But most of the time, the market often makes us stop loss or keep the loss until we can't bear to cut orders. While maybe many traders are aware that their strategy was wrong from the start.

Knowing when to stop loss can be one of the most important risk management lessons traders should learn as soon as possible so that you can spend time on the more important things of your trading...

Above are 5 tips to help you manage risk in trading.