Lack of capital is the biggest reason why traders fail in this business. And Brett Steenbarger, a respected trading psychologist, agrees.

While discipline and diligence will help you achieve your goals, if you have little or no capital to work with, your chances of making it yourself are minimal.

The main reason small accounts often get burned more easily is overtrading. One study found that 99% of traders engage in trading because we want to get rich or need money.

We want it all, we want instant money. We believe that we can turn $ 10,000 into $ 40,000 like great stories told by depositing a $ 500 trading account and expected to double every month.

It is not uncommon for such stories to be the bait of the industry. Of course, there are traders who turn small accounts into assets, but those are just the exceptions. What makes you think you are or will be one of them? Most likely you will have a gambling mentality and burn your account many times.

If you have to make a certain percentage of interest each month just to get rich quick, you will put a lot of pressure on yourself and this will affect your trading negatively.

In addition, you may gradually switch to day trading and monitor multiple tools at once to quickly enter as many orders as possible. While being a day trader is not wrong, your goals will often be subdivided compared to the swing traders and therefore pay more commission than your returns. . In other words, this can completely kill a profitable strategy!

Also, it is difficult to maintain patience when playing with small stakes. Can you actually sit in front of a screen all day, then enter the trade for just 1 hour, manage it correctly and make a profit of $ 30 - happily? Psychologically, trading on a small account won't work for most of us.

However, that doesn't mean you should increase your bet size until your account is damaged, but it's certainly better to trade on a "large" demo account instead of one real "small" account.

A $ 50,000 demo account will make it much easier for you to execute your plans than when trading a real $ 500 account. The joy lies in the numbers behind the zeros;) Earning a virtual $ 2,000 is more than a real $ 20, believe me!

And when you have proven on a demo account for 3 consecutive months that you can trade profitable, switch to real trade - a large account. That way, your success will come much faster and easier than working hard on a big goal.

But what to do when you can't afford to top up an account that's big enough (say $ 50,000)? The following options are available:
  1. Get investors involved - easily with a verified track record
  2. Continue with your current work and fund your account at the end of each profitable month
  3. Start other jobs to open up more passive income streams (extremely recommend for traders)
  4. Try to apply to professional trader positions for a prop trading firm
  5. Pass your trading knowledge to struggling traders and receive tuition fees (for mentoring, teaching, online classes, of course, up to you, if you are profitable).
Trading is not a get-rich-quick scheme, it's a business like any other (it simply won't work without a lot of liquidity).

Usually, when people get into trading, they want to quit their main job and don't even think about doing anything other than trading. Although that belief and passion are important, in the long run, it will help you become a better trader, faster if you have other sources of income to lean on, as well as boost your talent your trading.

So, in terms of absolute numbers, what is your goal? Yes, it depends on your living expenses. Living in Tokyo will of course require you to have a larger trading account than living in Bangkok.

The trading account size is ideal if you risk 1% or 2%, then you can still make a living by 1R multiples per month. That means if you have a $ 50,000 account and risk 2% per transaction, it would be $ 1,000 - this amount will cover your monthly costs. The rest will be used to grow your account and make your life better.

In an ideal scenario, you won't even have to withdraw money from your trading account because you have other sources of income. This trading approach will completely change your mindset.

If you only need 2-3 good trades per month, you will become a much better trader, as you will automatically be MUCH fussier. It's easy to sit still and wait, and you won't be as tense as before.