How to protect yourself from big trading losses

The success rate in the retail trading industry is very low. Though thousands of retail traders are joining the retail trading industry every day, people don’t pay any attention to the low success rate. By opening a trading account, you might gain access to the stock market but it will not ensure your success. To become a successful trader, you have to learn the proper way to trade the market. Protecting the capital is a very tough task. Unless you systemically take the trades, you will keep on losing money.

Today, we are going to learn some important details about the market dynamics. If you follow the rules mentioned in this article, you should be able to make a regular profit from this industry. Now let’s get into the core factors of this article.

Never break the rules

One of the key reason for which novice traders are losing money is breaking the rules. If you want to succeed in the retail trading industry, you can’t afford to break the rules. People who break the rules make things hard. They might blow up the trading account within a short time. There are many ways by which you can trade the stock market. But to protect the capital, you have to set easy rules. If the rules are too hard to follow, you will become frustrated and start looking for the shortcut. To avoid such hassle, you must learn to eliminate the risk factor and look for long-term goals.

Trade with simple logics

You don’t have to trade with complex logic to make a regular profit in the market. To develop a simple trading method, you can rely on the demo account. You could try here and test different types of trading techniques. Once you develop a simple rule, try to trade the real market and see if you can make a profit. If you can manage to make a profit for few months, without having any mental stress, you may consider the trading strategy as a valid one. But remember, you need to revise your trading strategy on regular basis and only then you can expect to take the trades like a professional trader.

Study the price action signals

To protect your trading capital, you should learn to trade with the price action confirmation signals. Learning about the price action confirmation signals is one of the most effective ways to make money in the trading industry. You might think price action trading is hard but if you do the math, you will realize it is one of the easiest ways to make a profit in the market. Instead of learning about the complex candlestick pattern, study the basic candlestick pattern. Once you learn to deal with the basic candlestick pattern, you should test your skills in the real trading account.

Use protective stops

Never take the trades without setting up the loss. Some of you might say that you can trade the market with mental stops. Though mental stop is an accredited method in the investment business, you should place your stop right after the execution of the trades. Even the professional follow this technique. While setting up the stop loss make sure you are not risking more than 2% of your account balance. If you do so, you are going to lose money most of the time. To protect your capital, you should also learn about the trailing stop loss features. Once you do that, you will become more confident with your actions and thus you will be able to trade strategically.


Protecting the trading capital is a tough task provided that you are new to this market. But if you follow the basic rules, you should have zero problems. And be ready to accept few losing trades since you never know what will happen to this market. Stop looking for an easy solution and learn about the market dynamics.