Tips for Trading with a Small Account http://www.financial-spread-betting.com/Making-a-living-spreads.html Regular traders with large accounts may have an edge over the beginning trader who only has a small trading account. When you have a large account, you can afford to make trades which involve risk. As mentioned previously, many professional traders will only risk losing 1% to 2% of their account on any one trade.
Once again, this doesn’t mean that you only put 1% or 2% of your money into the market. You have to go through the process of determining where your stop loss will be, and also take into account your projected profit level, as well as the probabilities that the trade will go in your favour. It’s something that you will have to work at until it becomes second nature.
When you’re starting to trade, obviously you do not want to risk a lot otherwise your career may be very short lived. If you have a small account, it is even more important to learn quickly how to be successful at trading. And success doesn’t come just because you put in the time – there are many tales of people with large accounts who have managed to lose it all, and have to go back to doing something else in order to earn money to live.
But arguably, even if you have a small account it is possible to make a go of trading. You may have to take a little more risk than with an established account in order to trade up to a level where you have the freedom to always keep the level of risk low. You have to accept that you may make an error that sets you back to where you started, but if you can take on more risk to get the high rewards, you should be able to build your account up to a decent level.
Obviously, you can’t treat your small account wholly like a large account – earning a few percentages a month on a large account can be fine, but a few percentages a month on a small account will never grow it. This means you have to watch for your opportunity, using what experience you can learn and gain, and wait for a time when the market conditions are right, the entry conditions are right, and everything seems to point in your favour.
On those special occasions, consider multiplying up your stake. If the market suits, you may be able to do this on successive trades, and lift your account value by an order of magnitude.
This is not for the faint hearted, and is also not for the novice who is still finding their way around the markets. But at some stage if you work diligently you will build up your experience and be able to sense when the time is right. Take care of your small account until you reach that stage, and it will allow you to build your experience. When the time is right, see if you can move up to having a larger account by taking more speculative but careful trades.
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