Hello traders, I'm back with another educational post after receiving a lot of positive feedback. Today I'm going to provide you with five tips for growing a small trading account!
- Define your why
As you all know 90% of traders fail, it's a well-known fact and it's the main reason why I provide so much free content... To help struggling traders.
I previously covered the three main reasons why traders fail on another educational post.
However, I would like to add another segment.
I believe many traders fail because they come into this business simply for the money and materialistic lifestyle that is being portrayed.
If you're only trading for the money, there is a very slim chance you will succeed.
You need to love what you do, there needs to be a reason bigger than the money.
If there's not, you will give up when times get tough.
You need to "define your why".
- Entries and exits
Entry, stop loss and take profit levels should be clearly defined by your trading rules/strategy/system.
Personally, I will not enter a trade without setting a stop loss or take profit level. This is a key measure for protecting your trading capital (big or small).
Every time you see an opportunity that aligns with your rules, you should know exactly where you're getting into the trade and more importantly, where you're getting out.
- Risk to Reward
One of the most important factors of risk management, risk to reward.
I ensure that all of my trading opportunities utilise a minimum 1:2 risk to reward ratio. This simply means if you are risking 100 pips on a single trade, your potential reward should be a minimum of 200 pips.
(Risk) 100:200 (Reward) = 1:2
Twice your initial risk!
- Mindset
You need to change your mindset.
You need to stop thinking "if only I had a large trading account I would've made..."
This is what I call the "small capital mindset".
Imagine you were trading a 7 figure account, would you be treating your money in the same way?
Treat your trading as if you are already managing a 7 figure account, this way you will be constantly analysing your potential risk.
You need to start focusing on the process rather than the outcome, trading is a never ending learning cycle.
- Small vs large
It's unbelievable how many traders fall into this trap, if you cannot grow a small trading account, you will not be able to grow a large one.
It's as simple as that.
It won't matter how much money you trade with, if you're not a profitable trader you will consistently lose money.
To round off this post I truly hope this highlighted various aspects of your trading where you can improve to better yourself as a trader!