Each trader, sooner or later, experiences periods of failure, when trade is not glued against the most positive forecasts. If you also stepped on the black bar – do not despair. This happens even with real shark trading.
First of all, you need to understand that the periods of work in the minus are an inevitable part of the profession. It’s not for nothing that income in trading is usually estimated at an annual, rather than a monthly, time. Because this is the minimum period for an objective assessment of the effectiveness of trade.
When you accept that drawdowns are inevitable, you can move on. Your task in such periods is to try to minimize expenses, not to go into even greater minus and reverse the situation in the opposite direction. How to do it? There are several ways.
Give up unpredictable markets
Markets with high volatility are potentially capable of generating great profits, but higher incomes are associated with increased risks. The less predictable the asset with which you work, the higher the probability of sooner or later go into deep minus. The way out is a temporary or final abandonment of volatile markets.
If the stock price rises to + 25% in the morning, by the evening it drops to -15%, and closes by + 10% – the asset is definitely volatile. In other words, volatility is an indicator of how much the asset’s price “jumps”.
Most crypto currencies are high volatility assets, but some are much less stable than others. During the work in the minus, you definitely should refuse to trade with new coins, which can grow and slip by hundreds of percent for a day or a week. You should switch to bitcoin, ether and other assets that are more predictable in the long term.
Simplifying trading strategies
Do you apply complex trading strategies using several indicators and additional calculations? Try to abandon this practice for a while. Use simpler schemes that have proven to be proven and reliable trading tools:
Strategy for the trend;
Strategy of shock days;
Hedging of currency risks;
Using simple strategies will allow you to relax and rethink your own trading principle. Perhaps you can derive new formulas that will work better than your old strategies.
Reduce in the number of assets
Reduce the number of assets and reduce the amount of trade. If you work with multiple assets at once, you can make mistakes without even noticing it. You should not scatter on several assets, if you feel that you are giving up positions. Choose one or two brands and work until you exit the minus.
A stable market is characterized by the presence of predictable trends that obey the laws of basic economic models. Strong jumps or drops in prices in such markets have specific reasons that can be tracked, and based on the information received, analyze the further behavior of the chart.
Use the “stop loss” function
To minimize cash loss, use a stop loss. This function gives the exchange the command to sell the asset when its price falls to a certain value.
For example, you purchased shares at a price of $ 100 per piece. For a week the price went up to 120 dollars. If you set a stop loss at $ 110, the exchange will automatically sell the asset when the price drops by $ 10. Thus you remain in positive territory.
The advantage of the method is that you don’t need to monitor the market yourself. If you don’t plan to abandon a large amount of trading, this tool will help to significantly reduce your losses.
To activate the stop loss on the IQ Option, click on the number under the “Buy / Sell” buttons. After that, the menu will open, where you will have to select the value of the asset, as well as the team to buy or sell.
To get out of the minus, you need to drastically change your strategy of work. If you are trading aggressively, slow down. Try more stable markets, proven schemes and signals. Use our tips and analyze the dynamics. If the curve breaks in the other direction, then you are moving in the right direction. Exit the minus gradually and fix the result.
NOTE: This article is not an investment advice. Any references to historical price movements or levels is informational and based on external analysis and we do not warranty that any such movements or levels are likely to reoccur in the future
GENERAL RISK WARNING