Becoming a part of the ETFs trading community is a very risky task. In the past, only skilled traders used to trade the ETFs market as the retail brokerage firm didn’t give access to this market. The recent advancement in technology and classic help from the elite broker like Saxo has opened the door of ETFs trading to the novice traders. However, such an advantage often results in aggressive actions from rookie traders.
The safety of the capital is the prime concern of the elite traders in Singapore. They don’t have any emotional attachment to this market since they know it pushes them to take greedy actions. To ensure safety, you can use these 5 protective steps as a professional ETF trader.
Use the low leverage account
The institutional traders never use an insane leverage trading account. To them, anything about 1:10 is considered as a very risky approach. To ensure the safety of the capital, the traders love to keep the leverage within their limits. Let’s find out the key benefits of using the low leverage account. With the help of a low leverage trading account, the retail traders won’t be able to take the trades with high risk. Even if they want to trade with greed, they will not have a big volume of trading power. This imposes great safety features on the trades in your account.
Avoid trading the news
Taking the trades during the key news is a great mistake. The traders must be taken during a time of low-risk exposure. On the major news, the market becomes extremely volatile and it becomes nearly impossible for the retail traders to take the trade. Most of the time, they become fruited with the massive swings in the price and loses a big portion of the capital. To ensure safety, you should not take the trade during the major news. Though it will be a little bit challenging it is the best thing to do as the ETFs trader.
Learn to use PA signals
PA signals are often known as price action signals. The top traders in the Saxo bank group use the price action signals to execute their trade with managed risk. Once you learn to trade with the price action pattern, you will be able to trade with tight stops. As a result of this, the risk factors will be reduced to a great extent and the traders will be able to trade in a much safer way.
Stick to the trend
You must stick to the trend to ensure the safety of the capital. Those who are taking the trades against the major trend are losing most of the trades. To them, trading is more like taking the trades with high risk. Remember, the major breakout in the trends tends to favor the trend. So, if you trade with the trend, you will get many added advantages. For instance, you might be able to catch a big movement in the price. But this will not be the case if the trends are not used by the professional traders.
Risk 1% of your account balance
Taking a 1% risk per trade might seem too low. Many traders might consider it the most conservative method of trading ETFs. There is nothing wrong with using a conservative method when the market is unpredictable. Even the world’s best trader can’t say he knows how this market will work. For this reason, it is advisable to trade the market with discipline. Though you can risk 2% of the account balance when the trade setup is much more prominent and offers quality setup. If you are not sure about the risk exposure, we suggest you start with a 1% risk. If you feel confident with the performance in the first month, take a 2% risk in each trade.