How to protect my account from huge losses?

Well it's a basic question from risk management area. First of all and most important - you need a trading plan.

There are many ways to protect account - as many as traders. But you can try this one: First of all you should set a limit where you cannot go futher a day/a week/a month depends of your account. So if you lost X amount of money in specified period of time you should stop. Stop and think - not stop trading at all - just wait a little bit. You need to clear your brain, take some time to refresh your view, and then go back to action.

You should also include in your trading plan size of your each position. Personaly I don't like to trade without stop loss - and I dont mean here visible stop loss level - just a value that I dont want to loose on trading cycle. Read also about Kelly formula - it can be used in many different ways - one of the way is finding perfect ballance between your winings and looses.

I guess the answer is to craft a trading plan. In the plan, input all information that dictates how you approach the market. You must trade based on your plan; otherwise you will trade based on gut feelings and emotions.

A trading plan should include, but is not limited, to the following:

1. A daily trading routine

2. Sources for market news and events for an overall market view, to form a fundamental analysis

3. Chart time frame for analysis and time frame for entries and exits, to form a technical analysis

4. Entry and exit criteria

5. Market conditions to trade in, e.g., trending market, ranging market, significant news events

6. Trading strategies for the above market conditions

7. Currency pairs to trade and pairs to avoid

8. Market conditions to stop trading

9. Mental conditions to stop trading

10. Amount to risk per trade – i.e., money management

(This is quoted from Mario's Forex Q&A blog)

First learn how to trade before trading. Learn with candlestick chart, as it is the easiest to learn. You might get this learning from e-books and videos. Then practice with demo account, until you are able to minimize the account.

Well I would not recoomend demo trading at all.

From 2 reasons:

1) The psyholigical aspect - if you trade demo money you don't care. So no mater if you will loose or win 1mln bucks it wont make any difference to you. When you trade real money - your real money - then you get more stress than you can even imagine. If you dont have large funds I recommend you to open micro account and trade 0.01 lot all the time. It's much better lesson than demo trading. Demo trading is just good to check EA in first steps if it dont have any bug that blows account - it's not good for learning how to trade - bcs you dont feel emotions. Greed, anger and happines is something very powerfull.

2) Demo quotes are different, prakticaly there are no requotes on demo, prices are smooth, going nice in your favour while on real trading it's not like that. Long time ago I was testing very rapid scalp strategy on demo to check if it works properly. It worked like a charm, making huge returns. So I put it to real trading and it turned 180 degrees. It wasnt trading at all - there were no opportunies to trade - that's the difference. Real trading datafeed IS DIFFERENT and it's FACT.

Persolany I think it's much better to use external datafeed to make trading decisions than feed from your broker.

If we have enough experience in demo trading then I think we are able to protect our account from loss. Because our experience helps a lot to make a profitable order. Simply if we use take profit & stop loss then I think we are able to gain maximum & loss minimum.

Or think forex in a different approach. make it like a game

Good suggestion. I think if we treat forex like a game- it can be a better to protect your account from huge losses.

forex is risky business but if you do not keep patience you will loose money. so i trade in relax mode in a totally different approach. Suppose in a Fx broker,if the trend goes against your trade, you can lose all your money with in minutes,but in the game where I joined recently- is totally different. If the trend goes against me, I will lose only the amount I bet in the game.

For e.g If I played a game of forex all $10 in a given period of 15 min and able to defeat my opponent, I won $18 in my account immediately , otherwise If i lost, automatically 0

In the tournament, the collection can be more depending the number of players and amount bet. I find it very challenging this game-trade1on1. I give a pause in my trading since i joined it. Now I am thinking how will I defeat my friends or other traders in the game and won.

You can protect your account by using good money management or using a proper stop loss in every of your trades. Without stop loss, your entire account is at stake.

Plan, that's all you will need to protect yourself from big losses.

A plan that state how you manage to get out of the market when you lose and how much you are going to lose in any particular trade as well.

quite simple,

Just make sure that you never take a big loss. Have a standard SL for each pair and determine whether the risk is

below 2% or not.

Secondly never allow a winning position to turn into a looser. Moving the SL to break even should help with this.

PAT