And experienced traders can use smaller accounts to check their new skills or strategies in live trading to minimize losses.
I don't see how it is a problem using small account. It is useful for beginner traders to experience live trading with lower risks and capital involved in it.
Small account is not a problem until you know when to enter the market and when to leave. Small account let you know how to trade keeping in mind the long term review.
The fact that something is good or is working doesnt mean that there arent problems or issues associated with it.
One problem I have with small accounts is that when I am already in a trade which is going against me, but I definitely know it is going to shortly turn and go in my favour, because the account is so small it cant accommodate another position which would enable me to double my gains.
Yesterday I saw gold at 1847 and I knew it would give back most of the gains it had made over the last two days and go back down to the low 1830s. I couldnt place any trades because my account is so small and I was already in a trade. smh.
What I find is that many of the people posting on here are not speaking from real experience but just regurgitating what they hear others say.
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Not really if you are a beginner and looking for live trading experience, then using a small account is actually beneficial because the risk and capital involved in it is lower.
People -
Surely we can get past the negative attitude?
Surely its not good enough to say a small account is good because then you only lose a small amount?
I did not forget the first time I placed a Forex trade back in 2010 wondering if I had got the mechanics of the trade right. When I passed my driving test I had a Triumph Herald (£40 worth), not an E Class Merc. All things in good measure. It is easy to forget how terrifying it is the first time around - to do many things in life.
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Small account size can be a problem in forex trading because it can limit the amount of leverage that is available to the trader. Additionally, a small account size may not provide enough capital to earn good profits.
Trading a small account is not a problem, but on the contrary, it is beneficial for new traders who hesitate to risk large capital. Trading a micro account will be a great learning curve for new traders to gain confidence and experience to trade large positions.
I personally do recommend in using small account if you are starting to trade for the first time. The main aim is not to make a profit, but rather allowing you to understand the surrounding of the trading, when placing order or executing one.
No, using a small account does provide low profits, but it is one of the safest ways to trade in forex without taking much risk, and the loss is also at a smaller value.
It is mostly suitable for beginner traders that are looking for live trading experience with lower capital.
Start with what your comfortable potentially losing would be my advice
Size of the account does not matter. Consistency in profit earning matters a lot. The smaller the account is the smaller are the worries about losing actual money. It is even better if you are fine with small profits and are not in a hurry to make money. You will be able to learn a lot with a small account risking a small amount of money.
Not if you are a beginner. Using a small account during your inital stages of live trading is actually an advantage because the loss and risk involved in it are at a lower rate and can be recovered easily.
I totally agree, Starting trading live using a small amount is a wise start. Small account allows a trader to understand the nature of the market and learn to control his emotions while trading live. As a trader learns and gains experience he can switch to a standard account
You have the answer - small account is not a problem.
But it CAN be a problem, if treated without caution.
The most important factor will the be broker account to trade with. Very popular setup for broker account is 1:30 leverage and minimum position size = 0.01 lot. This means, that:
- You will be able to open around 1-3 trades at the same time for 0.01 lot (required margin for 0.01 EURUSD is around 36$)
- 1 pip on EURUSD will have value of 0.1 USD
- 2% of your capital is only 20 pips with minimal position size (not counting the spread)
- If you want to keep 2% risk (or something similar) you need to trade low timeframes which is more risky. Going on D1 or H4 will force you to stretch your risk out of comfortable zone or stop you out too often.
With such parameters it IS possible to trade, but you will need to ignore multiple trades waiting for one which meet your tight stop loss criteria OR risk more than reasonable. It would be best to trade demo with higher balance and gather more trading capital in the meantime. But, if you really need to start trading right away with 100USD - it is possible, but be very cautious with broker account.
I remember that some time ago Oanda allowed position sizes at unit level (0.00001 lot) not sure, if there are any other brokers with such setup, but this gives much better resolution and allows much smaller positions (=much better risk control and more trades taken)
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Small account is not a problem. With a small account, your trading lot should be tiny as well. There is a thing called risk management in trading. It suggests that you must not take more than 2% risk in a single trade. If you take less risk, the reward would be small as well. This is it. Do not concentrate on earning money first. Concentrate on earning number of pips. You will be on the right track to make a good amount of money within some years.
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Providing you can practice good risk management and have realistic expectation of what is possible with $100 then that is fine. Too many expect to be making 10x on their deposit each month with that much and it simply won’t happen. AT least not sustainably
As above use proper risk management so between 1-2% per trade irrespective of account size and let your edge payout
Using a small account as a beginner is the right choice to make, and it is also one of the safest ways to trade in forex without causing any big loss on your profits.
I don’t see starting trading with a small account to be a problem. With small risks, traders can get acquainted with the market better. But in the longer run, this wouldn’t bring you big profits. You have to take higher risks to get higher rewards.