Not everyone is able to start trading with a big account. In fact, if you are a beginner, it’s certainly better for you not to risk a big amount of money right away. At the same time, smaller accounts do require a special approach.
Lot’s of traders in the Sub Sahara region where many countries economy is either low or emerging, Many youth are unemployed and find it hard to get the minimum recommended capital to start trading. Since the industry has brokers who allow a minimum deposit of up to $10 and insane amounts of leverage up to 1:3000, many traders jump into trading because of the minimum barrier of entry and dream of making big money out of the $10. With the low capital they lack the important skills to survive the industry for example: Money management skills, Mental health and meditation and other important skills that I learned the hard way.
In today’s short lesson i will explain how to manage a small trading account. First and foremost if you have anything below $200 i d suggest you find that capital because this lesson will be irrelevant to you. Next, probably i should be honest with you. You need money to make money in this industry many traders overlook this and finally find themselves in the hamster wheel. They get lucky growing to a decent amount then they lose it all. May this be the last time you are struggling with a small trading account.
1. PRESERVE YOUR TRADING ACCOUNT
Small accounts cannot make big money. So don’t focus on that.
Instead, focus on not losing More than the minimum Draw down. Make preserving your trading account your top priority.
A better approach is to ditch the focus on a win percentage and instead focus on preserving capital/downside risk.
2. APPRECIATE THE POWER OF SMALL ACCOUNTS
Stop thinking about how vulnerable your trading account is.
Understand that you need to be more disciplined and diligent than the average trader to succeed. You have very little room for error.
This appreciation will increase your mental capital and increase your odds of success.
An advantage that small accounts do have is that they are aware of how close they are to not being able to trade. Therefore, they carefully plan and patiently wait for their trade setups unlike a trader with too much money in their account who will take trades on any whim at all because they feel like they are playing with house money.
3. REDUCE YOUR FINANCIAL STRESS
If you have a small trading account, you should not depend on your profits for your living expenses.
You should seek income from other sources and try to save as much as possible. This will help you:
- Trade with less stress
- Increase your trading capital
4. USE LEVERAGE WISELY
Leverage is dangerous. Misusing it can ruin your trading account, regardless of its size.
For small trading accounts, leverage is essential for accessing specific markets.
5: BE REALISTIC
Don’t aim for the sky. Be realistic.
Most likely, your small trading account will be a practice account. It will help you hone your live trading skills, but you will not be making a living out of it any time soon.
And, even if you do everything right, you will still need a long time to grow the small trading account to a size that matters. Patience is crucial.
Being realistic means recognizing a few truths about trading with a small account.
Recognize that most of the time you will not be trading.
Don’t trade because the market is open and you want to make money, trade because an opportunity that you are prepared to capitalize on has presented itself.
Alright that’s all for today folks. Leave a comment below and i ll see you in the next lesson.
Professional Forex Trader in Tanzania. Meet my Analysis, Forecast and Psychology lessons here almost Everyday.