A lot of traders ask this question in the comment section I have just started trading forex and don’t have too much capital to put into, so how to grow a small forex account? This is the situation of every beginner. Even some part-time traders want to put only a fraction of their investment in trading due to the risk associated with it.
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From my last 15 years of experience in the market, I could say that growing a small account requires a lot of effort and discipline. I am sharing A set of rules and strategies one must follow in order to grow a small forex account
1. Never risk more than 2% of your margin on a single trade
The market will present you with dozens of opportunities every week but to make the most of it, you need capital in your trading account. So always preserve your trading capital no matter what. If your trading account has a $5,000 balance, then 2% of that amount will be $100 of risk per trade.
2. Always take a trade when the risk-to-reward ratio is more than 1:3
It takes a few extra minutes to spot a good opportunity and that is the edge. Taking a position in the market whenever there is a good risk-to-reward ratio increases your probability of success. One can use a combination of technical indicators and momentum oscillators to find that perfect entry.
For instance, one must enter into a position where the risk is only 2% of the capital and the potential return is at least 6%. This rule will definitely help to grow your small account.
3. Avoid day trading
Many traders prefer day trading because they think they can do 5 to 10 trades a day and make a good return. This is not possible. This is pure gambling. Trading is a boring process. One must have a valid reason to enter into a trade.
Avoid taking 5-minute or 15-minute time frames into consideration. A beginner with a small account will get confused due to the choppy price action on the smaller time frames. Use an hourly chart or four hourly charts for entry and exit setups else you will lose a ton of money in stop loss.
4. Cut the Losses on time
When trading on a regular basis it is easy to get emotionally attached to your losing trades. If you do not close your losing trades on time, then this can lead to margin calls and the broker will close your position on your behalf.
5. Ride your profit using trailing stop loss
When your trade is profitable and you are getting a good return then trail your stop loss to the next immediate support level and ride your profit. Price moves thousands of points in One Direction during economic events then why settle for only a few 100 pips?
Read about “What is a Forex account?“
The majority of us start small and grow with time. Trading has a steep learning curve. With the right psychology and discipline, it is possible to grow a small trading account.
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