Trading with Small Forex Accounts
There is no doubt about the fact that trading with small Forex accounts is hard. It takes a good deal of skill and knowledge to turn a small trading account into substantial. However, with the right methods it is more than possible to deal with small Forex accounts.
Sure, you might only have a couple hundred dollars at your disposal to trade with, but everyone has to start somewhere. Let’s talk about some tips on trading with small Forex accounts so you can start making real money.
Tips on Trading with Small Forex Accounts
The fact of the matter is that it is indeed possible to make money when trading with small Forex accounts. Moreover, it is also more than possible to grow that small account into something substantial that you can be proud of. Here is some of the best advice you can follow when trading with small Forex accounts.
The 1% Risk Rule
One of the most important rules which all traders aspire to follow, not just those with small Forex accounts, is to only risk a certain percentage of the overall balance in a single trade. For the most part, professional traders will stick to the 1% risk rule.
This means never risking more than 1% of the account balance on a single trade. So, if you only have $10,000 in your account, you would not want to risk more than $100 in a single trade. This helps provide a bit of a buffer zone, and in case a trade goes south, at least you will not wipe out all of the funds in your account.
Now, if you only have a few hundred dollars to start with, so an exceedingly small account, you may be forced to risk more than 1% of your total balance due to minimum trade requirements. However, the closer you can still to that 1% risk rule, the better off you will be when trading with small Forex accounts.
Take Profit & Stop Loss
Another thing which you always need to do when trading with small Forex accounts is to take full advantage of stop loss and take profit levels. Now, all traders use these to try and bank profits and minimize overall losses on losing trades. However, both stop loss and take profit levels are much more important to get right when trading with small Forex accounts.
Generally speaking, traders with large account balances may set stop loss levels at around 50%, which means that if a trade goes south, the trade will be able to save at least 50% of the initial investment from going down the drain. However, when trading with small Forex accounts, you can’t really afford to lose that much. Therefore, it is recommended that you set your stop loss level to 90%. In other words, if the value of your trade decreases by 10%, the trade will close, thus saving the other 90% of your money from being lost.
On that same note, the take profit level is important to take into account as well. Most traders will set take profit levels at around 50% above the initial investment. Sure, this is great if you are looking to maximize profits. However, if the trade only provides a 10% profit, and then goes south, you won’t bank any profits, and will probably end up losing. Therefore, when trading with small Forex accounts, it is best to set that take profit level at only a few percent above the initial investment. No, the profit won’t be huge, but it’s always better to take home any small profit than to suffer a loss.
Leverage Your Trades
When it comes to trading with small Forex accounts, something else you can try doing is to leverage your trades, although this can be dangerous. Leveraging trades, in layman’s terms, means that you can trade with far more capital than you actually have at your disposal. For instance, if you only have $10 to trade with, but you want to place a trade for $100, you can leverage your trade by 10:1.
This means that while the trade is actually for $100, you only have to put up 10%, or in this case $10, to place the trade. It’s a good way to quickly increase your small Forex account.
However, do keep in mind that leveraging Forex trades is very risky. This is because although you only have to put up a portion of the capital for the trade, if the trade is lost, you are on the hook for the full amount. Leveraging trades is something that should only be done if you are confident in your FX trading abilities.
Learn & Plan
In terms of trading with small Forex accounts, what you never want to do is to start trading without the proper knowledge and a good plan. Sure, you might get lucky and win a few trades, but chances are almost 100%, that if you start trading with no plan or knowledge, especially with small Forex accounts, you will be wiped out before you know it.
Therefore, it is vital that you do some studying first before you begin trading. Taking a full scale Forex trading course, such as the Income Mentor Box Day Trading Academy is highly recommended. There you can learn all of the skills needed to be a successful day trader. You will learn all about the most effective trading strategies which you can then incorporate into your game plan. Remember, trading blindly never works well for anybody.
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Trading with Small Forex Accounts – Final Thoughts
At the end of the day, while trading with small Forex accounts is much more difficult than if you have a massive pile of cash, increasing your account balance is still possible. It just takes a bit more planning, knowledge, and caution.
Once again, one of the best possible things you can do is to join a course like the Income Mentor Box Day Trading Academy. It will help teach you everything you need to know, and that includes trading with small Forex accounts.