When starting to trade, the majority of people will begin with a small currency trading account. As going big is the human need, many won’t resist the temptation for big profits.
However, big profits come over time. Therefore, understanding how to grow those accounts to make meaningful profits and not to destroy them. Nowadays, it is easy to enter the market. At the same time, it is easy to lose significant amounts of money. For this reason, it is better to start small.
So, how do you grow a small trading account?
In the following article, you will get some tips to become a successful trader by starting from scratch. Finally, by following this advice, you will be able to make constant profits.
Preserve Your Currency Trading Account as Much as Possible
I know this may sound like the opposite of growing your account. However, it is still a fact that over 90% of traders are losing traders. Therefore, preserving your account means staying in this game.
If you can learn not to lose money, you will be keeping yourself in the game for a lot longer. By preserving your account, you are increasing your chances of success in the long run.
Thereby, focus on making sure you’re able to preserve your capital. During this time, make an effort to understand your edge. Admittedly, it will help you to become a profitable trader in the long run.
At the same time, the preservation of capital is the first step in developing a focus. As trading is a psychology game, you will need to create a mindset of the trader.
In this case, it means consistency and focus. Seemingly, both need time. Therefore, preserving your account is of the utmost importance.
Gradually Increase Size of the Risk
To increase the profit size of your small currency trading account, you generally will need to take some more immense risks. However, to start with higher risk trades is not the best idea.
The suggestion is to increase your risk size gradually. For example, in the first month of trading, you will only risk 0.5% of your account per trade.
After a month, you increase the risk to 0.75%. In the next month, increase the risk to 1%. Finally, stop at nowhere above 3% per trade.
If you set these percentages right, it will help you to focus on execution. Consequently, you will stop you from worrying about the financial risks of each trade and focus your mind on the process itself.
It is a simple game. As your efficiency in your trade execution increases, so will your profitability. At that point, when you gradually increase the risk, your returns will also increase.
Please remember not to risk any more than 5% at any point. Moreover, we highly recommend not risking more than 3% to preserve capital in the long run.
Even the experienced trader doesn’t risk more. 5% of your account per trade is the consensus for the maximum risk.
Add Size to Winning Trades
Seemingly, this is a tool that helps both reducing risk and increasing profits. Even though it will need proper execution, and may only be suitable for specific strategies.
Scaling into trades is something professional traders will often use. For a small currency trading account, this can be a great way of building up size and potential profit. And it could happen in just one position.
The idea here is to set larger profit targets. Afterward, move stops. For example, if I have set up on a GBPUSD chart (like the above), I can go short. If the price moves to a level whereby I can move my stop to break-even, I will then look for the next set up.
I can go short once more on the same GBPUSD chart. It is a similar amount of risk, and I am looking for a similar profit target. Therefore I am maximizing potential profits, and I can do it multiple times.
Another way to execute this is by splitting the risk. But this can only work on specific strategies. For example, for consolidation breaks, a trader would enter at the low of the consolidation if they expect it to break higher.
Once price does break higher out of the consolidation area, they would then enter once more. They are thereby splitting the risk in half on each trade. So, if the total risk per position were 2%, they would put on 1% on the initial position. Moreover, 1% would go on the break. Finally, splitting risk and increasing profits by gaining more pips from the initial position.
All the abovementioned is something I have found has worked well for myself. Seemingly, it can help to give you an advantage in the market.
Compound Profits for Small Currency Trading Accounts
Finally, I will mention a well-known tip for increasing a small currency trading account. Although famous, compound profits are still a significant driver of growth.
If a trader relies solely on trading profits to live from, this can hinder the growth of a small currency trading account.
Especially if the account size is small, dipping into their profits will shut down the growth. In the end, it will restrict their ability to compound and grow their small currency trading account.
However, a trader that allows their profits to stay in the account will have more opportunities. It is because it will give them self increasing opportunities to make massive gains. Nothing compares to a chance to grow significant profits per trade.
When the accounts grow, so does the risk parameters increase. At the same time, the reward parameters will get bigger, too.
Another way of compounding is to fund your account continuously. In this case, it will help you increase risk/reward ratios and grow profits.
Of course, you can add funds from any savings you may have. Additionally, you can boost your parameters from another income source.
Whatever is the case, remember not to trade money that you cannot afford to lose. It is because this is a hard game where the risk of failure is high.
Know Your Limits and Understand Your Rules
These are some of the tips we have for you to help you grow small currency trading accounts. Finally, the best advice is to know your limits. Furthermore, remember always to do not risk large percentages on one trade.
Use these tips to help you grow. However, also make sure to adapt them to your trading strategies. It is because sticking to your plan is a matter of perseverance that will bring results.
As mentioned, always remember this is a hard game with a high rate of failure. Therefore, perseverance that keeps you longer in the game gives you more chances to become successful.