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Yes, Give it to me

How to Grow a Small Trading Account 

Last Updated: November 16, 2020

By Rayner

You probably feel like a tiny fish in an ocean when you鈥檙e trading with a small account.

威客电竞竞猜 the profits you make seem so insignificant that you wonder if it鈥檚 worth your time and effort.

But here鈥檚 the good news鈥

In today鈥檚 post, you鈥檒l discover 5 practical trading tips to help you grow your small trading account into 6-figures, or more.

The best part?

You鈥檒l learn how to do it steadily so you don鈥檛 blow up another trading account鈥攅ven if you have done it the last 5 times.

So let鈥檚 get started鈥

How to exploit the 9th wonder of the world and massively increase the size of your trading account

As you know, compound interest is the 8th wonder of the world.

Here鈥檚 how it works鈥

Let鈥檚 say you have a $1,000 trading account and you earn an average return of 20% a year.

After 30 years, your trading account would be worth鈥

$237,376.

Not bad.

But, what if you add an extra $1,000 to your trading account each year, what difference would it make?

So, let鈥檚 do the math again鈥

Let鈥檚 say you have a $1,000 account, you earn an average of 20% a year, and you add another $1,000 to your account every year.

After 30 years, your account would be worth鈥

$1,655,634.

Holy cow!

Can you see how powerful this is?

Yes, compound interest works great. But, if you want to put it on steroids, then you must regularly add funds to your trading account鈥攖hat鈥檚 how the big money is made!

Why looking at your profits causes you to remain a loser

Here鈥檚 the thing:

Most of us get involved with trading because we want to make money.

However, when you have a small trading account, focusing on your profits will hurt your trading performance.

I鈥檒l explain鈥

Let鈥檚 say you have a $500 account and you made a profit of $20 on a trade.

Then you鈥檒l think to yourself:

鈥淚 invested so much time in trading just for a measly $20?!鈥

鈥淚 need to make more money to justify the effort I put into trading.鈥

So, you ignore risk management and place larger trades. You might get lucky and double the size of your account.

Eventually鈥 lady luck runs out and you wipe out your entire trading account.

So here鈥檚 the lesson:

Don鈥檛 focus on the size of your profits because with a small trading account, your profit & loss will also be smaller.

Instead, look at it in terms of R (a concept I learned from Dr. Van Tharp).

This refers to your gain/loss relative to the risk you took on a trade.

For example:

  • If you risk $10 on a trade and made back $50, that鈥檚 +5R (50/10)
  • If you risk $1,000 on a trade and made $500, that鈥檚 +0.5R (500/1000)
  • If you risk $200 on a trade and lost $300, that鈥檚 -1.5R (300/200)

So by focusing on your R multiple, you鈥檒l have an objective view of your trading performance鈥攁nd not get swayed but your 鈥渢iny鈥 profits.

The secret to trading a 7-figure trading account (it鈥檚 not what you think)

Let me share a story with you:

I鈥檝e been lifting weights since I was 20. And when you鈥檙e young, all you cared about was lifting heavier regardless of your form.

Eventually, I paid the price.

My poor form and heavy lifting got me an injured back.

Now, I knew that if I wanted to continue lifting, I need to re-learn how to lift weights鈥攕o I got a coach to help me with it.

And do you know what鈥檚 the first thing we did?

We stripped off all the weights and just focus on lifting an empty bar (no ego, no pride, nothing).

Then he taught me the process of how to do a proper squat:

  1. Approach the bar
  2. Keep your shoulders tight
  3. Lift the bar and take 2 steps back
  4. Keep your back straight and feet pointed out (about 45 degrees)
  5. Take a deep breath
  6. Squat and maintain posture
  7. Use your glutes and drive up to a standing position

Once I mastered the process, then we added weights to keep gaining strength.

And guess what?

Whether you鈥檙e lifting an empty bar or 100kg, the process of doing a proper squat is the same!

Now, why am I sharing this with you?

威客电竞竞猜 it鈥檚 the same for trading!

Whether you鈥檙e trading a $500 account or $1m account, the process is the same (the only difference is the number of zeros behind your trading account).

If you want to learn more what the trading process entails, then go read How To Be A Profitable Trader (Within The Next 180 Days).

Not all brokers are created equal. Here鈥檚 what you must look for when trading a small account鈥

Here鈥檚 the deal:

Whether you鈥檙e trading a $100 or a $1m account, one thing is constant鈥攜our risk management.

This means you want to keep your risk per trade to not more than 1% of your account.

For example:

  • On a $100 account, your loss on a trade shouldn鈥檛 exceed $1.
  • On a $10,000 account, your loss on a trade shouldn鈥檛 exceed $100.
  • On a $1m account, your loss on a trade shouldn鈥檛 exceed $10,000.

Now if you have a $10,000 account (or more), then most forex brokers can meet your risk management needs.

But on a $100 account, you have further constraints because your loss cannot exceed $1.

Let鈥檚 say you trade 1 micro lot with a stop loss of 50 pips.

If you do the math, that鈥檚 a potential loss 5% to your account鈥攏ot good.

The solution?

You must find a Forex broker that lets you trade nano lots (which are even smaller than micro lots).

These brokers are market makers and they will allow you to practice risk management even on a small trading account.

How to profit from your mistakes without paying expensive 鈥渢uition fees鈥

When you trade with a large account, your 鈥渢uition fees鈥 to the markets will be costlier.

For example:

If you risk 1% on a $1m account, then your potential loss on the trade is $10,000.

So if you make a mistake, that would cost you $10,000.

On the other hand:

If you risk 1% on a $1000 account, then your potential loss is $10 which is a much lower 鈥渢uition fee鈥.

So, don鈥檛 fret if you have a small trading account because this is a great time to learn from your mistakes鈥攚hile they are still 鈥渃heap鈥.

So now the question is鈥

How can you learn and even profit from your mistakes?

Here鈥檚 how鈥

  1. Journal down at least 100 trades (whether it鈥檚 trading breakout, pullback, etc.)
  2. Identify the setups that make you money and focus on trading these setups
  3. Identify the setups that cost you money and avoid these setups

And the best part is:

It won鈥檛 cost you much to find out which your money-making setups are and which to avoid at all cost.

Conclusion

So here鈥檚 what you鈥檝e learned:

  • If you want to grow your small account into 6 or 7-figures, then you must regularly add funds to it
  • Don鈥檛 be obsessed with your profits because it will make you depressed. Instead, focus on increasing your R-multiple
  • The process of trading a small account is similar to a large account. So focus on the process, not the money (which comes later)
  • Your trading mistakes will be 鈥渃heaper鈥 on a small account. So learn and profit from it
  • You must find the right broker which allows you to practice risk management even on a small trading account

Now here鈥檚 what I鈥檇 like to know鈥

How do you intend to grow your small trading account?

Leave a comment below and share your thoughts with me.

  • Start small and focus on the R profits
    Also keep a journal of 100 trades and keep a check on what works and what doesn’t – great advice

  • Start small and focus on the R.
    Keep a check on what works and what doesn鈥檛. The lower the tuition fee,the better way to learn.

  • Excellent rendering of the importance of risk management !!! which we small traders tend to ignore , trying to strike it rich and lucky!!!

  • Like my $80 micro account, I would be targeting only 10-30 pips as the market to choppy now, even my risk to reward ratio is a 1 or 2 percent of my capital. So I will target small pips until I grow my account.

  • I think it makes sense learning from this that either Big or Small account, Risk management is the guide answer. And focusing on the Process and not the profit. No wonder they say little drops makes an ocean.
    Thanks Rayner.

  • Hie
    Thank you
    if u don’t read and understand this article but will be one of people that are saying trading is a scam

    Thumbs up

  • I fear not the man who practise 10.000 kicks one time but the man who practise one kick ten thousands time..I need Bruce Lee to remind myself..even I need wait for days or a week..is really a waiting game..and don鈥檛 squeeze trigger wrongly..

  • Am willing to start small, but at the same time i need to focus on all aspects of my trading plan on how am i going to grow my account, because the challenge to us, sometimes we trade alone, without anyone helping, and thats the hard way.

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