Why trading small accounts is not worth it

If you are talking about making profits with your small accounts, then definitely they are not worth it. But when it comes to learning and improving yourself as a trader, these small accounts do come as your saviour and help you get better. You don’t need to risk big amounts and can understand the live market dynamics before you put a huge amount at risk.

Because trading a small account is much more difficult than trading a large account. Large accounts are buffered against mistakes, unexpected losing streaks, and sometimes even bad traders, but small accounts have no such buffer.

I totally agree and it makes more sense to compound your balance and add more as time goes bye. If you are well rounded trader You can view this more as an investment

I totally agree with the opinion that trading small amounts of money is getting us nowhere. I mean that it can be very useful to start trading as I feel that it is much better to trade with your real money instead of trading demo account in order to learn how to trade. However, if you look forward to earn the money so that trading will bring you some financial profit or just if you want to derive pleasure from your trading, small amounts are not suitable for this.

I can't entirely agree with it. Trading with a small account is worth it for many beginner traders and for traders trying out new strategies so that their capital is not affected in the worst way.

And for beginners, it is the best way to gain live experience with minimum risks and money involved.

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As for me, it depends more on the trader himself. For example, many people are generally afraid to trade with large amounts of funds.

because there is little profit from small capital, and even this is not very profitable, therefore this type of work is more suitable for beginners

How many beginners do you expect to be profitable with their first live account? In that context would you recommend they open a $100 or a $10,000 account?

Trading small sums of money is getting us nowhere. It is like a torture. You spend hours analysing the market and you may do some successful deals, but you’ve got nothing for it. It is very easy to lose all the motivation to trade.

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one can still learn trading conditions with small accounts

On growing small accounts consistently.

There is a thing called PROP FIRM. It is where large companies invest in talented traders provided you can pass their test. If you follow their rules to the dot. You can be a very discipline trader.

If you have extra money and good strategy, you can open an extra account for the community to follow your trade, you get subscription fees. Win-Win situation. You have your main account and your community accounts.

If you love numbers. Following Signal Provider accounts would be a great place to start. You can learn a lot how to control risk from senior trader.

Personally, I believe that trading small accounts if you are trying to find out what strategy can work in your favor as opposed to doing in demo trading. Some people wants to try out before putting large amount of funds into trading.
But if you are trying to make profit from small account, then that’s quite difficult to do so.

It depends upon your trading and money management skills.

Generally trading is business. To get out alive you need to have healthy balance between income, cost and risk. You can ride a Ferrari right after getting drivers license and survive, but chances are you end up wrapped around the tree next to your garage. Until you have a solid method of taking money from forex you should reduce the cost of making mistakes. I repeat that often - If you want to learn from mistakes, ensure these are cheap ones.

If you are a person strong enough mentally (I am not that kind of person) you can trade demo account in the same way you would trade real one. It’s the by far the cheapest way to learn trading (zero cost). However, based on observations, people tend to treat demo account as, well, demo account :slight_smile:

Most people would learn best, using small account. By small I mean one to allow you risk small percentage of capital in one trade. For scalping small account may be even few $, if you trade from daily chart, ranges are larger and your risk (and minimal account size) need to incorporate this.
Small account can be funded even by introducing some savings in day to day shopping, having some other investment vehicles or selling your old stuff etc. Go buy that milk in special offer few times and you will save for one free trade :slight_smile:

Starting trading with larger accounts (in forex) from my experience is just painful. Each loss is quite hard to swallow and can build up negative defense mechanisms. Avoiding trading, overtrading, changing strategies etc. It is very hard to come up with your way of trading without losing A LOT of trades.

I’ve started with medium account on stocks years ago. It was a bumpy road and managed to go flat. After a break I’ve started forex account with Oanda which then allowed trading with units and small leverage. This was great as given the feeling of real money, but still the risk per trade was cheaper than box of matches :slight_smile:

You can double or triple the demo or small account, but think twice before getting larger account. Feeling of little to lose is a straight way to overtrade, risk too much and feel overconfident. This may give impressive results, but I don’t believe these would be replicable and consistent year after year.
“I can double my account in one year”
“OK, so sell your house and double it” :slight_smile:

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Real money experience is important

Yes but if you’re making a decent yearly return percentagewise this will fortify your belief in yourself to continue adding to your account on a monthly basis for compound growth

At Least we can learn without worrying about high capital loss. Imagine working on a huge account and losing it all because you were not good at your analysis. I agree that we all want to make money but I believe in sharpening my axe for a longer period before actually cutting the tree.

It depends.
I do really think that it is better to learn trading forex on real account and it is better to hedge the risks in order to eliminate the probability of blowing a huge account within a single trade. Surely, it is not a good idea to keep on trading microlots for too long and it is better to expand your trading budget on a regular basis. It is just like trading with demo. It is suitable to trade demo money for about a couple of moths, but there are traders who trade on demo for ages and they got used to it so much that they are afraid of switching to the real account. It is always important to find a golden mean.

What is bad about taking a $300 account and making it into a $400 account? Or $500? Or $600.

If you can do this, do it. If you can’t trade profitably from $300, you probably won’t be able to trade profitably from $3000 anyway.

Its similar to being an inexperienced and short-sighted car driver on an unknown road at night. Driving a bigger car won’t make you a better driver.

Agreed with you on this. If you can turn your small account into some profitable amount, then you are off to the great start.