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A lot of people seem put out by having to start trading with
a small account. They contact me and ask how best to proceed and if they should
increase their risk until they grow the account.
Now this may seem hard to believe, but starting with a small
account is a much better way to begin as a trader than slapping down thousands
of pounds and jumping in like Dirty Harry with all guns blazing.
I should note that this also has to be taken sensibly - If
you have £1,000 to your name and that is the entirety of your savings and you
need it for a family holiday later in the year, then even putting down that
amount as a small account is a terrible idea. Trading money should always be
money you can afford to lose, certainly until you become consistent.
So how is starting with a small account going to work in
your favour?
Quite simply, it allows you to make the mistakes that all
beginners make. There is no way you can learn anything new without making
mistakes. They happen. You’re human (I think?) and shouldn’t beat yourself up
over them. That is a LOT easier if you’re losing £10 or £20 in a trade,
rather than £500 or £1000. Emotional trading is like a magnet – it attracts
more of the same. And it all stems from the fear and hatred of losing money.
You need to build discipline BEFORE coming face to face with it.
A small account lets you focus on your trading plan and
learn how to follow it to the letter. It doesn’t matter so much if you win or
lose trades when you’re winning and losing small amounts. That leaves you open
to focus on what is important – doing it properly. And as that small account
grows, you’re growing as a trader with it, bringing along all of the attributes
required to trade well.
The broken record that is me advises you to start small,
give yourself time and focus on getting it right. The rest falls into place as
you go.
I hope you all have a great trading week!
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