How to begin small if you want to become a profitable trader?
It’s no secret that traders must start small and gradually grow their account size to become profitable. But for many traders, this can be difficult because it seems impossible to make money when you’re starting with such a small account size. In this article, we’ll discuss tips for beginning trading small to grow your account size and gradually become a successful trader.
Understand what type of trader you are
Before you even begin trading with a small account, it’s crucial that you first understand what type of trader you are. Are you a day trader or a swing trader? It will determine how often you’re looking to trade and the size of your trades.
For example, if you’re a day trader, you’ll need to make more frequent but smaller trades to grow your account size over time.On the other hand, if you’re a swing trader, you can afford to make fewer but larger trades since you’re holding your positions for more extended periods.
Find a broker and an account that fits your needs
Once you know what type of trader you are, it’s time to find a broker that can accommodate your needs. For example, if you’re a day trader, you’ll need to find a broker that offers low commissions and fast execution speeds.
You’ll also want to consider the type of account you open. If you’re looking to trade with small account sizes, for example, you might want to open a micro account that allows you to trade with smaller ones.
Here is how you start trading with a broker
To begin trading with a broker like Saxo NL, you’ll first need to open an account with them. You can do this by visiting their website and following the instructions on opening an account. Once your account is opened, you’ll need to deposit money into it to start trading. The amount of money you need to deposit will depend on the broker you’re using and the type of account you opened.
Once your account is funded, you can start placing trades. You’ll need to log into your broker’s trading platform and select the asset you want to trade. You’ll then need to enter the details of your trade, such as the size and price, and submit it for execution. Monitor your trade and close it when you’re satisfied with the results.
Remember to always risk-manage your trades
It’s crucial to always risk-manage your trades, regardless of the size of your account. You should never risk more than 1% of your account on any single trade. For example, if you have a $500 account, you should only be risking $5 per trade. It will help ensure you don’t blow up your account if a trade goes against you.
Generally, it would help if you also considered keeping your stop-loss fairly tight when trading with a small account. It is because even a slight loss can significantly impact your account balance.
Learn the basics of trading before you start
If you’re new to trading, you must learn the basics before trading with real money. You can do this in many ways, such as taking an online course or reading books on the subject. It’s also a good idea to practice trading with a demo account before you start using real money. It will allow you to get a feel for how the markets work and how to place trades without putting your capital at risk.
Start small and gradually increase your investment as you learn more about the markets
Once you’re confident in your trading ability, you can slowly increase the size of your trades. For example, if you’re originally risking $5 per trade, you could increase this to $10 once you’ve had a few successful trades.
It helps if you also look to increase the number of trades you’re making as you gain more experience. If you’re only making a few trades per week, for example, you could look to increase this to 10 or 20 over time.
Stay disciplined and don’t overtrade
It means avoiding overtrading or recouping losses by taking on too much risk. If you find that you’re losing money consistently, it might be time to take a break from trading or reduce the size of your trades. Sticking to your trading plan and not letting emotions get into your decision-making is also essential. For example, if you’re frequently second-guessing your trades, it might be worth re-evaluating your strategy.