You might be wondering why the term defense is used in the investment business. Everyone knows that losing is just a part of this game. No matter how hard you try, you are going to keep on losing money. But with your strong risk management plan and perfect risk to reward ratio, you should be able to recover the losing trades and stay on the profitable side of trading. But is there any way by which we can reduce the number of losing trades? Can we improve our win rate significantly? Well, you can take some defensive steps to protect your trading capital.
In this article, we are going to give you some amazing guidelines which will help you to create the best defense for your trading account. By following these rules, you should be able to execute high-quality trades in the market and make significant progress without losing too much money.
Accept the losing trades
You must train your mind to accept the losing trades. Having such a bold mind will help you to reduce the losing trades to a great extent. Since you will be taking the trades with zero expectations, chances are high that you won’t make any mistakes with your lot size calculation. In short, you will be taking the trades in a conservative way and thus you will be finding more profitable trade deals.
On the contrary, if you trade to win big money, you will get depressed after losing a trade. Eventually, you may start revenge trading the market which is one of the key reasons for losing up your confidence at trading.
Create a robust trading strategy
People who trade the market with a professional trading method tend to lose less. They never become biased or follow aggressive steps in their actions. So, what it takes to create a professional trading strategy? You need to explore different kinds of trading techniques and see how the elite traders are taking their trades. As you learn different trading methodologies, you will be able to curate your trading system by picking the best factors.
But remember, to create your trading system, you must trade in the demo trading account. Without using the demo trading account, you will never know what it takes to become a professional trader. So, take your time and learn to trade this market with strong discipline.
Develop your risk to reward ratio
To create a defensive plan to protect the capital from the big losses, you should be trading the market with a high risk to reward ratio. People who trade this market with a low risk to reward ratio find it really hard to recover the losses. Usually, they become restless and trade with high risk. On the contrary, the professional traders execute the trades with a high risk to reward ratio and it allows them to make a big profit at the most complex state of the market.
So, instead of creating a complex trading system that has a low risk to reward ratio, you should be working on your existing trading strategy. Work hard to improve the risk to reward ratio factors in the trade and you will become much more confident with your actions.
Learn candlestick pattern trading strategy
Most people think that the complex trading method is going to make them rich. But after using a complex trading method, they realize it is another key reason for which they are losing money. To protect your trading capital, you should learn about the candlestick pattern trading technique. Instead of trying to memorize the different candlestick patterns, you should be working hard to understand the psychological reasons behind the formations of different candles.
Once you become good at that, you should be able to take high-quality trades with an extreme level of precision. So, never become biased with your actions and follow a complex trading method. Try to learn about the candlestick patterns as it will make you much more profitable.