Trading seems attractive to many because people think this is a fast and easy way to get rich. Well, it is possible, but let’s not fool ourselves. Trading is hard work. You need to invest your time and practice a lot. The key is to be a better trader and you can achieve it by the learning process, choosing money management strategies and following some basic rules. One of such rules is, to begin with a small account. And in this article, I will tell you why you should do this.
The pros of keeping a small trading account
Developing a trading plan
With a small account, you can focus on other things than making money. You will not make a lot with a small amount anyway. On the other hand, you will not lose a lot as well. This ensures your mind is calm and you can pay attention to the very basic matter which is developing a trading plan. But trading a small account is still much better than using a demo account with virtual money you can recover every day if something goes wrong. Using a demo account for learning purpose is possible, although staying with it for too long can lead to developing bad trading habits.
A solid and personal trading plan is your guide through the trading journey. It contains all the details about your goals and the actions you should take and those you should not while trading. Adjust the plan underway, so it reflects your preferences and character. Maintaining a trading journal will be very helpful here. With the journal, you will be able to keep track of your past transactions and check what was working and what was not.
Improving trading performance with small trading account
As I said before, trading with a small account allows you to concentrate on other issues. The same laws work for large and small sums. So take it slow and try to improve your trading performance in each session. Following your trading plan and controlling your emotions will help you in this task.
Dealing with the pressure
There is always a stress factor in trading. You can feel pressure to keep opening transactions to recover losses or you can feel like you are on a winning streak. Emotions are not good advisors and you should learn to deal with the stress.
A small account involves a lot of pressure and thus, trading such will be a good lesson for you. Why a small account is so demanding? First of all, the risk taken is higher in relation to the account size. Your balance account can be depleted faster, just with a few losing trades. Also, the trading strategies you can use for small accounts are limited.
But the good news is that with such training you can turn into the master of trading under pressure.
Everybody dreams about success. And success is absolutely within your reach. You just need to know your objectives. You have to be ready for the process. It will take time. You must read, you must learn and observe.
Begin with a small account. It has many advantages as I have tried to explain in this article. You will be able to focus on improving your skills instead of gaining profits.
What is your opinion about keeping a small trading account? Share it with us. Kindly use the comments section which you will find further down the site.
Enjoy the trading process!