How To Protect Your Capital As Newbies?

This article is for traders, especially for traders who are just starting out.

Firstly, making mistakes as newbies is basically unavoidable. No matter how smart or talented you are, unless you’re guided by someone who are much more experienced and can oversee all your trades, you are likely to make mistakes while making decisions.

Hence, in this post I will list few simple rules to help you protect your capitals

1 – Split your total capital into 5 to 10 equal parts, depending on the size of your capitals. This is to spread your risk among your trades equally. Avoid risking too much in single counter. You will never know what may happen to the counter in the future

2 – Buy only uptrending stocks. I can never stress this enough. In my videos course I always stress the importance of following the trend to my clients. The trend is your friend. Never go against the trend. That will burn your money faster than you can realise.

Many newbies traders make the mistakes of buying downtrending counters because they looks cheap and attractive. They looks cheap for a reason. They’re simply bad.

3 – If you’re down 10%, cutloss at whatever cost. This is simple to state, and very important to follow. No matter what happens, if one of your counters go down 10%, you, CUT, LOSS. without questions. Dont wait, dont hope, dont think. Just cut and get out. Negative 10% will soon turn to negative 20% if you dont cut it.

4 – If price & 20 MA crosses below its 50 MA just cut. Also an objective way to define weak counter. If this happens, just cut your losses and get out. You’re wrong, take it. Dont wait, dont hope, dont think. There are always other better counters and better opportunities.

5 – If in doubt / unsure / just get out. This is easy rule to follow for beginners. If you are not sure whether the counter you’re holding is good or bad, just get out. Getting out is, most of the time, good decision. Getting in and losing money is always worser. Just stand aside, continue observe what happens to the counter, and keep notes. Until when? Until you are sure or confident enough on your trading skills.