As embarrassing as blowing your trading account seems, it’s common. Some famous, successful traders worldwide have once blown their trading accounts earlier in their careers. However, most will say they learned from their blunders despite the painful experience. The big question is, do you have to blow your trading account before succeeding as a trader? NO!
Although it’s human nature to fear losing money, losing money in trading is sometimes inevitable. In this era of virtual trainers and innovative trading platforms, traders can quickly learn from other traders’ mistakes rather than repeating them.
How do you avoid blowing your whole account as a trader or losing as little as possible? You will learn that in this article! Here, I have carefully reviewed 7 expert-proven strategies that won’t make you blow your trading account.
Let’s dive right in!
Top 7 Strategies to Avoid Blowing Your Trading Account
1. Be Educated About Your Trades
Rather than blindly following other pro traders’ actions, explore and learn more about indicators and market movements to make knowledgeable decisions for your trading. I am not saying you shouldn’t copy trade. In fact, I offer VIP signals for traders, too. However, do not just follow these signals blindly. Know what you are doing.
Additionally, don’t just trade; consciously examine the market time, and know when to buy and sell. Having considerable trading knowledge prevents you from blowing up your trading account.
2. Break Bad Habits Early
Having a trading journal where you input all your trading activities will help you identify bad habits, thereby avoiding them. Spot those destructive behaviors fast and work to stop them from triggering. For example, it may be a gambling habit that triggers you to go “all-in” on a single trade, take note of it and work to stay away from it.
Though you may get lucky for a while, bad habits ultimately leave lasting adverse effects. You cannot afford to lose your life savings (and earnings) to habits you could’ve found a fix for.
3. Be Conscious of Emotional Trading
Trading based on emotions never works. However, it may be difficult to separate emotions from trading because we are human and subject to our feelings. However, you should consciously put specific types of emotions in check.
Never trade in fear or revenge. Trading anxiety also doesn’t work out well. Other emotions you should never give in to as a trader include a magnified perception of danger, stress, or market hype—decisions based on these result in reckless actions and overtrading, which can blow your trading account. Hence, controlling your emotions is a significant part of the strategies that won’t make you blow your trading account.
4. Set A Maximum Stop-Loss
The benefit of setting trading stop loss cannot be overemphasized. It’s the best strategy from the get-go and must be applied beforehand. Unfortunately, people don’t usually know how vital this is until they land on the wrong trading side. Always follow the 2% rule, which says you shouldn’t invest higher than 2% of your balance in one trade.
Set a hard stop loss for yourself and consider the risk factor before clicking the buy or sell button. Don’t risk more than you should! Think about loss because it’s unavoidable. Remember, the key is to live to compete another day.
5. Talk To Other Successful Traders
If you are networking and getting insight and knowledge from the people you are on the same trading level, you can blow your trading account. To set yourself on the right part in your trading journey, communicate with successful traders, learning from their mistakes and trading skills, as most of them have made many blunders that blow up their trading accounts.
This includes learning how they shared emotions around their trading, such as fear, stress, disappointments, greed, etc.. Above all, trading is 80% a mental game, so knowing how to preserve mental health in trading is vital.
You can join my community of traders on Telegram today to network and learn from others’ trading mistakes. More importantly, I share free trading signals daily.
6. Set Realistic Goals for Yourself
Goal setting is one of the most overlooked aspects of trading. It’s one of the best strategies that won’t make you blow your trading account. Like every other life endeavor, being a successful trader requires setting goals. However, setting goals is not as crucial as setting realistic ones.
Setting unrealistic goals can ruin you as a newbie trader. Unfortunately, most people start trading with an impression of how much profit they are willing to make monthly or yearly, causing them to push themselves beyond their tolerance level and blow their trading account!
Also, always remember trading is not a get-rich-quick scheme. Therefore, set achievable weekly, monthly, and yearly goals and understand that there will be challenges throughout the journey.
Be calm, and don’t expect something unreasonable. Having clear, realistic goals will help you avoid overtrading that may blow your trading account.
7. Always Check Out The Volume Before You Initiate A Trade
A common error most traders make has to do with volume. Volume is the amount of money being traded in an asset. As a trader, you must always check the volume before trading. By using indicators such as accumulation and distribution, money flow index, and on-balance volume, you can understand how money is going and coming in and out of stock and then interpret it.
Ending Thoughts On The Strategies That Won’t Make You Blow Your Trading Account
To make consistent profits from the market, you must know that trading will earn you money only if you trade with discipline. The vital point here is to have a realistic trading plan and stick to it. Don’t allow your emotions to ruin your trading plan, no matter what.
Ultimately, trading is the same as other disciplines, as it gradually requires years of training and practice to progress… anything aside from that is pure luck! Also, know that risking an appropriate amount of money with the right trading plan is the best way to save you from unnecessary losses. Remember to stick with the above-proven strategies that won’t make you blow your trading account!
Have you blown up your trading account before? Do you have other mistakes to add to your experience? Have further questions? Leave a comment below – I would love to hear from you!
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