Monday, February 22, 2016

How Forex Traders Can Trade With A Small Amount

You may feel as if you're at a disadvantage starting your trading career with a relatively small trading account. But, as we will look at this in this article, that feeling is simply an illusion that stems from focusing on the wrong things.

One of the biggest mistakes most young traders focus on before venturing into forex trading is how to become a profitable trader faster. If you measure you profitability over one or two weeks, sure you may get lucky on a big account and make a good chunk of change real quick, but if you give it all back right after that, what does it matter? Profitability should be measured over a much longer period of time; at least six months to one year.

If you don't know how to trade profitably on small account, you won't trade profitably on a big account either. Simply having more money to trade with does not mean you will become a successful trader faster. In fact, if you don't know what you're doing, it can mean jus t the opposite; that you can lose MORE money faster than if you had a small account.

Once I heard a story of trader who started with 50USD and turned that into 150 USD in one week, the question here for upcoming traders will be is this possible? Yes it is and very achievable.

The is always a feeling for not having enough to trade with, You feel like you take one step forward and two steps back with your trading. You feel like 'if only I had more money I could just make a bunch of money real quick in the market and quit my job'.

Sadly, it doesn't work that way

Do you think if you gave a $100,000 trading account to someone with absolutely no trading experience, they would do well with it? I'm sure you'll agree they would probably not do well, at least not over a period of six months. In fact, they'd probably be down to 50k or less within a few months.

So, why do you believe that if you 'just had more money' it would dramatically improve yo ur trading results? Not that you have 'absolutely no trading experience', but it's safe to say if you're reading this article, you probably are looking for some help for one reason or another and you haven't quite become a master of your trading strategy yet. So, the problem is not money, the problem lies within you, and until you fix it, you will continue to experience disappointment and loss in the market.

You should actually consider yourself lucky if you don't have a large trading account right now, because it's better to learn and make mistakes on a small account than on a big one where there's potential for greater financial and emotional loss and the stress that comes with it..

Mindset and change

The first thing you need to do is adjust your mindset from one of 'I want to make a lot of money trading' to one of 'HOW I can make a lot of money trading?' Once you do this, you will experience a change in what you are focusing on…

T hink about this…how WOULD you think IF YOU DID have a big trading account? Well, you would not be thinking 'if only I had a big trading account'…because you have it, so you would instead be focused on learning to trade properly and developing a successful trading strategy and plan.

Thus, you NEED to think 'as if' you have a big trading account already, because if you don't trade 'as if' you will never make money. Instead, you will be constantly forcing the issue by risking too much and over-trading, since you believe so deeply that 'money' is the issue.

Your trading mindset NEEDS to make a switch from 'money' to 'the process'. I've said it before and I'll say it again; if you want to become a successful trader you have to focus on the process of trading, not on the money.

So, if you have a small trading account…

Here's where the 'rubber meets the road', so to speak…

If you are going to trade as if you're a m illionaire, THEN you're going to have to accept some realities of the situation…

Those are,

You won't be taking a lot of trades, instead you'll be trading like a sniper.

You will be trading small position sizes on a small account, that is if you want to manage risk properly, and trust me, you do want to do that, you NEED to do that to not only build your account up but to stick around long enough to learn proper trading skills.

Money cannot motivate you at this point. Instead, be motivated by learning proper trading processes and habits, i.e., staying disciplined and patient / following your trading strategy to the T.

You cannot think about 'recovering' your losses…that's the wrong mindset and it will only lead to more losses.

Why it's 'so hard' to build a small account

As I mentioned earlier…you probably feel like you take one step forward and two steps back sometimes with your trading. On a small account this can be maddening because you feel like you're never going to build it up.

Well, you need to also focus on holding onto profits. Don't give back your winnings on the very next trade because you over-traded and were greedy. Imagine you are trading a 100,000 account…let's say you made 10 grand on a trade…how would you feel if you immediately gave that much money back? Well, if you are giving back $100 winners on small account, you would be giving back $10,000 winners on a big account. You need to get all of these issues fixed before you trade bigger amounts of money. So, once again, be glad you don't have a big account yet and focus on the process and on becoming a good trader.

Conclusion

Trading a small account is not a disadvantage, especially if you're relatively new to trading and you aren't yet a consistent trader. How big your trading account is plays no importance in your overall trading performance or trading skill. Sure, if you have a bigger account you can trade larger position sizes and potentially make more money, but if you don't know HOW TO TRADE, all the money in the world won't do any good.

So, learn how to trade first, focus on the method and enjoy the journey. Stop worrying about 'making money fast' or 'getting rich and quitting your job', because the less you focus on those things the more likely they are to happen. Forex trading needs a plan, a process watch and execution strategy and abiding by all these is what it takes to be professional trader.

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