How to trade a small account
In This Video:
00:52 John’s Approach to Small Account Trading
02:10 The Advantage of Starting Small
03:44 Choosing the Best Path Forward
In this week’s video I’d like to offer you some helpful tips if you’re starting out with your trading with a small account, so let’s get into that right now!
Hi traders, this is Andrew Mitchem here the Forex Trading Coach, and today is Friday, the 15h of May. And I’ve had an email here from John who’s a client of mine over in the UK and he’s been with me for around 12 or 13 months. And we’ve had a discussion about some tips to help with focus and determination for someone who is starting trading with a live Forex account, but only with a relatively small account. When I say small, I mean something around about, let’s say, a thousand dollars or thousand pounds, somewhere around that type of level.
John’s Approach to Small Account Trading
And John said to me it’s just really important to stay focused and keep determination within your trading because when you do have a small account, obviously if you have profits, then they are small and steady. But it’s really important to, actually, forget the monetary return and actually focus on the percentage return because, like John said, if you focus on the actual monetary return, it’s not that exciting to start with. But you’ve got to see the longer term picture.
Then, John said here, what tips would I give, because he said, in the past he’s been guilty of overtrading and trading short time frames and looking at scalping the market. So my advice there was, obviously, trade the longer time frame charts and to look at trades with higher returns.
And so John’s actually done that – he said, “I’ve been putting in a huge amount of time and effort and my motions have been tested but all the time I’m trying to better myself.” And you have to remember this is a longer term investment. He said, “It’s an investment in myself and in my finances. I started a few months ago with a demo,” after taking a break from his trading! He opened a one-thousand pound demo and after a few weeks, felt really confident with that because of results, and is now back live trading again.
The Advantage of Starting Small
So, in the last four-weeks, he’s up 12% on his live account by only taking half of one percent risk per trade. It’s a fantastic achievement! And as he said, “With starting small, it can be hard because you do not see your account growing a lot based on the small account size.” But like he also correctly mentioned, he said, “If I had 900 to a thousand pounds in the bank, there’s no way in the world I would have made 12% in a month.”
So, you know, you look at it that way and you think, “well, look at the percentage of what you are making because whether it’s a small account or it gets slightly bigger, or a large account – you know, 12% in a month is 12%!”
And he said, “I’m trading profitably, target of 2 to 2.5% per week,” and he’s also developed a longer term plan – a spreadsheet of projections which helps keep you motivated so you can track your results and see that over time, the results are going up and up and up and up, which is fantastic – it helps to keep you motivated and it helps to take your focus away from the actual monetary return.
And like he said here, he plans to top-up the account as and when he can, over the coming months, and use it as a retirement fund. And lastly, after our email conversation, John said, “Andrew, I think it’s important people appreciate it that you’re not going to get millions in a month, it’s not going to happen. But with small wins, they soon add up and with compounding, anything can happen!”
Choosing the Best Path Forward
And so, yeah thanks John! That’s exactly right. It is quite hard when you’re actually starting out with a small account and thinking, I’ve spent hours and hours looking at charts over the past week, the past month and I’ve made 100 dollars or a 100 pounds, but you know, that was a 1,000 dollar or 1,000 pound account – you’ve just made 10%, which is a massive return!
So, think of it that way, when you’re starting small. Don’t look so much about the monetary return. I know people think that monetary returns are important and I need to live, feed my family, etc. – I fully understand that! But from the longer term perspective of wanting to better yourself to be a better trader and a successful, profitable trader over time, I just urge you to look at the percentage return. Have a very simple percentage risk on your trades but look to make those longer term percentage gains, exactly like John’s done here.
You know, it may have taken him a year to get to that stage – that’s absolutely fine! But look where he can now move to with confidence of taking what he’s learnt in the demo, placing it into a live account; now actually achieving results in that live account, and now, slowly but steadily, building that live account. So, fantastic achievement John! You’re doing what 95% of the traders out there are not doing and you’re making money, so that’s the really important point.
So, you know, you’re making returns, you’re making money, and you’re enjoying it, you’re stuck at it, well done and wish you all the best of luck and of course, you’ve got my help there to back you up if you need it with things.
So, that’s it for this week. Hope that has been very helpful for you and if you do have any questions like John had here, feel free to drop me an email: [email protected] or just click on the link on the text on this video, and look forward to helping you more with your trading, becoming a successful profitable trader, and I’ll bring you some more tips this time next week.
So, once again, this is Andrew Mitchem from The Forex Trading Coach!