The first and most important rule in trading: Don't lose money. The stop loss on IQ Option immediately comes to the fore, but it is not our only suggestion for minimising trading losses. The traders obviously want to make money. Sometimes, beginners focus too much on earning profits. They forget that the most important thing is to learn how to keep the money in the account. If they cannot manage to do that, there will be nothing left to make profits from.
Every trader experiences losses. Not all the trades can win. The method that works 100% times and will bring 200% profit does not exist. If someone promises you such a thing, stay away from it or you will lose not only the money you have paid for this magical strategy but also the cash you had in your trading account.
What you should do is concentrate on minimising losses. The time to think about multiplying the amount in the account will come afterwards. Take a look at the table below. It shows how important minimising losses is. When you lose 20% of your capital, then you need to get a 25% return in order to recover. And if you lose for example 60% of your capital, then you need to earn 150%(!). Further numbers speak for themselves. So first protect your capital, because it can be really difficult to recover your initial balance.
Tips on ending the trade on time
Place a stop loss on IQ Option
You should use the possibility to set a stop loss as this will protect your capital. Something like the IQ Option no loss strategy unfortunately does not exist.
How do you set stop-loss properly?
Decide where you place a stop loss before opening a trading position. The best point is where you predict the change in the price will occur. It helps to secure the position against too excessive loss. You can use stop losses when you trade CFDs on IQ Option.
On the IQ Option platform, the stop loss is located in the right panel in the Auto-Close section. It can be set before the trade is opened. You can also add a stop loss order for an already open position. It is interesting to note that the stop loss on IQ Option can be set not only as of the price level at which the trade will be closed. Additionally, the platform gives us the possibility to set an automatic closing of a position when it loses a certain percentage or when the position loses a certain amount of money.
Stop trading at the end of the day
As a day trader, you should close all the transactions at the end of the session. It may sometimes mean exiting a profitable trade. You may be tempted to leave the position open until the next day. Don't. The prices in the market change the direction constantly and it is better to stop trading at the end of the day.
Do not invest too much in a single trade
Some trades will win, and others will lose. If you put too much in a single transaction, you may find out your loss will be great. By limiting the investment amount to a certain percentage of your account balance, you will not experience excessive failure. Moreover, you will have money for more transactions and this means more opportunities to win.
You may hear the advice not to invest more than 5% of your total capital. But it really depends on your money management strategy and whether you are a beginner or a professional. In the beginning, it is better not to exceed 3-4%. You can invest as little as 1 or 2% of the balance. With time, you gain experience and you may try 5, 10 or even 20% of the account balance.
Do not risk more than 2% of the trading account
You should think about the risk you are ready to take when trading. Generally, it is advised not to exceed 2% of the trading account. If your trade begins to go over 2%, this is the sign you should close the transaction.
Consider the table below. The sum both traders start with is the same. What is different is the risk they take. With a bigger risk, the amount left in the account is much smaller than with a risk that does not exceed 2%.
Resist the temptation to gamble
You may occasionally feel the urge to gamble. Even if you are good with online casinos, it is better to drop gambling while trading. Do not double your risk just to recover the previous loss. Do not hunt for new possibilities to enter transaction when there is really none only because you lost the last one. Trading is not gambling. The decisions you make should be thought well through.
Risk management is one of the most important things you ought to learn in trading. You need to be able to keep the money in the account before you will start to think about making a profit.
It may happen that you will end the transaction that could turn out profitable. But do not worry. New opportunities will arise. The market is open tomorrow as well. And it is better to finish occasionally too early than to wipe out the account by keeping the trades open for too long. Without money, you will not have a new possibility to recover a loss.
Using a stop loss on IQ Option and following other recommendations to minimize losses is key to trading. Without this, profits may never materialise.
Remember there is a free demo account on the IQ Option platform. You can use it to practice different approaches, new strategies or indicators. Check if you are able to keep the money in the account. This way you will be well prepared when moving onto a live account. At the same time, the chances for opening successful transactions will increase.
Share your experience with us in the comments section below.
Best of luck!
GENERAL RISK WARNING
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