Everyone thinks that without having a big trading account it’s not possible to earn money. In the past, this statement was true to a certain extent, but things have changed a lot. People have access to leverage trading accounts and the elite traders in Singapore are making millions of dollars in profit from a small investment. But having a leverage trading account at Saxo doesn’t give you the guarantee that you will make millions of dollar profit. You need to learn the art of trading the small account. You can read it on this page.
Before you start learning the details of trading with a small account, you need to understand the problems associated with a small amount of trading capital.
Problems of small trading account
Using a small trading account forces you to trade with high risk. Most of the time traders are not happy with the profit factors since they can’t afford to increase the lot size. Eventually, the naïve traders become frustrated and start trading with high risk to earn more money. Things might work well but when the traders lose few trades in a row, they start losing confidence and eventually lose their entire trading account. On the other hand, the traders don’t have too much back up to use wide stop loss for the trade. To be precise, they are using the day trading scalping method to secure a daily profit. These two trading strategies are the most complicated trading methods in Forex. Without having extensive skills and trading experience, you can’t expect to deal with such a strategy.
So, what should we do?
Since trading with a small account poses many problems, you need to find a simple solution. Try to come up with a unique idea by which you can use the leverage and start executing big volume trades in the Forex market. Instead of using a traditional strategy, you have to educate yourself about the price action trading method.
A price action trading strategy might be tough but you do have the freedom to use the practice account. Start trading the critical levels in favor of the trend by using the price action signals. Instead of memorizing the candlestick pattern, try to correlate the price movement and the pattern of the candlestick. Once you start to know the difference between the bullish and bearish price action signals, things will start to make sense.
Develop a precise trading method
To trade with a small account, you need to have a very precise trading method. Without having a precise trading method, it’s really hard to recover loss. Moreover, you will be trading the market with the help of the leverage trading account and this might result in a big loss. Always remember, a single movement can make a great difference when you trade with a high lot.
During demo trading, you should maintain a small trading journal so that you can find the weakness in the trading system. Find the faults in the strategy and fix those issues. Try to come up with a unique idea so that you can make a big profit without taking too much risk. The strategy should be crafted in such a way so that you never feel stressed when trading.
Global economic news
Those who have small trading capital should never try to trade the global economic news. Though fundamental factors can give you a unique profit-making opportunity, you have to think about your equity. The market becomes highly volatile during such events and it becomes nearly impossible for retail traders to predict the price movement. Even if you trade with a big balance, chances are high you will not be able to make a profit at news trading.
So, stop testing your luck by trading the major news with a small trading account. Learn about the different trading sessions so that you can pick the trading asset when the market is relatively stable. Last but not least, don’t become too aggressive to find good trades and increase amount of capital you have.