This is one problem that a fellow trader is facing that causes his trading account to be wiped out twice.
Below is the question:
After trading for about 3 months I have currently halted trading as
my account got wiped off twice. I want to start trading again as I have been making good profits prior to account wipe off.
I have noticed that in my case losses and wipe off’s has occurred during news breakouts. How can I proactively manage and safeguard my account against news breakouts?
After reading your question, my first impression is you did not place any stop loss at all. There is no way you can get your account wiped out due to news breakout or any breakout if you have your stop loss placed.
If you are not using stop loss in your trading, I will like to take this opportunity to advice you to do it. If you do not, you will never be able to see consistent income in your trading. You can make a lot of profit but it just take one major movement to wipe them out.
If you have been using stop loss, here is what you can do to manage and safeguard your trading account.
Personally I have the habit of shifting my stop loss to breakeven point when the price has hit certain amount of profits. This is to prevent the price from coming back to hit my original stop loss which leads to losses.
The risk with this method is that there will be time where the price will come back to hit your shifted stop loss and later move in your original profitable direction. However if you want to become a professional trader, you will have to realize that protecting your capital is more important than making profits.
Another method that you can adopt is to keep a lookout for important news release. Not all news release will move the market, it is only those important ones that will do so. Therefore I will suggest you to keep a lookout for such reports and then get your trades out before the release of the news.
I know some traders who will never have a position before a important news release. I believe that they do not want to get into losses due to such movement.
I hope that I have answered your question. For those of you who have something to share with us regarding this question, do feel free to give your comments below as it will be very useful for other traders here.