How To Build A Small Trading Account

beginner insight strategy Aug 01, 2020

How to build a small trading account

With over fifty million people around the world turning to the financial markets to build their capital and to create an income there are many who struggle to build a small trading account. After all, whether you are a great trader or a very a new trader most people will be starting off with a small trading account that they want to grow into a bigger one.

However, straight away the pressure of building a small trading account into a larger trading account can be too much as it seems like a huge jump. Of course, everyone wants to get there overnight too! In reality, it can definitely be done but there are some key principles in growing a small trading account which have been laid out for your below.

1. Stop 'trying' so hard

It sounds counter intuitive to stop trying so hard to build a small trading account. After all to get ahead in life you need to try hard right? Well, in most cases that is right but when you have the ability to trade a five trillion market in the matter of seconds it's not. That is because if you try too hard to achieve your goals and desires you're just going to be left with too much emotion that you will never trade properly.

Now, of course you have to work hard but the most important lesson here is the fact you must enjoy and allow for the process to work in your favour. Daily habits of following your trading plan is the absolute key to remaining in the right mental state to keep on trading for the long term, building up the experience and knowledge required to grow a small trading account. After all, Rome wasn't built in one day was it?

2. Focus on trading, not the money

We all have different emotions towards money and for the most part they are negative emotions. When it comes to building a small trading account it is hard not think of the huge mountain to climb from five hundred dollars to fifty thousand dollars. That's because on one trade you might make five hundred dollars profit which is absolutely great but you are so focused on the fifty thousand dollars it doesn't seem great and you don't reward yourself for success. If you went to work every day and they didn't reward you for success how would you feel?

That's why it is hugely important to just focus on trading; that's it. Your job is to focus on one trade at a time, it doesn't matter about the dollars and cents that are attached to it. If you can follow the right process than you'll be on your way to growing the small trading account in no time at all, as a by product of you just following your own process.

 Any successful business who targets a million dollars in sales in one year doesn't always focus on that number. They have building blocks and a strategy the team focus on everyday that will get them towards that number at the end of the year. It's not different when it comes to starting with a small trading account and trying to grow it.

3. Don't be greedy; little and often is the winner

It's very easy to get greedy in a profitable trade. It's so easy it's the number one killer in growing a small trading account because, let's face it, you have small trading account and you want to turn it into a bigger trading account. As soon as a trade starts to move in your favour the cash register starts ringing in your head thinking 'this could be that trade' - the one that will get you to your bigger trading account number right now. Low and behold your greed gets punished and the trade turns around to stop you out at a loss. The euphoria of you hitting nearly hitting your targets (you weren't even close but you were thinking this trade could do it) then the low of it turning into a loss is an emotional rollercoaster you just don't need.

Little and often will help build your trading account over time. Don't worry about catching the whole move as no one has no idea how far a market can move. Sometimes you'll mist sometimes you won't but all you can do is be consistent and banking profits little and often is the consistency you need to not only grow a small trading account but build confidence. That's because making a profit on a trade is a huge confidence booster which is necessary when growing a small trading account into a bigger one.

4. Treat $1 like a $1 million

If you ever had to take advice from any one Warren Buffett, the world's richest man and most profitable investor ever, would probably be a good person. If he says treat $1 like $1 million then that's probably sound advice. In fact, when building a small trading account it's imperative you treat the 'small' amount like a 'big' amount.

It's important because it's easy to get into a gamblers mentality when dealing with small amounts as deep down it's not going to hurt you too much if you lose on this one trade (you're probably still going to have a roof over your head after all). But not only does it stop the 'gamblers mentality', it also gets you ready for when you do start trading a bigger account with more zeros at the end of each win and each loss.

After all, you want to grow the small trading account into a bigger one so you also need to be ready to handle the bigger amount. You can see why building daily habits of successful trading is so important; as your account grows the more you need to grow to be the trader that can trade it.

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