When I say small accounts, I refer to every account below $10,000. Never think that trading a smaller account is less attractive. Everyone in this game starts from the beginning, and it will be ten times more fun to trade and enjoy yourself.
We have many ways to GROW a small account in a short period, but before you even consider using my tips, make sure you traded a real account funded with $100 for a month and had some success.
Tip #1 Use Leverage To Your Advantage
The first thing it is important to understand fully is leverage and why you must have it on smaller accounts. Most Forex brokers will give you leverage between 1:10-1:20. You don’t need more, for sure. But if your broker offers 1:50, take it. The key point of leverage is not to have a crazy amount of huge lot sizes, but to help you to have room to open more than one position at a time.
So, when you trade smaller accounts, your risk profile can be a little bit more aggressive.
Each trade MUST have precisely the same risk, and I suggest going with 2% for Risk Per Trade and keeping it that way till you have a 10k account (after that, you can drop it to 1%).
The next most important part would be Risk Reward, here you should go for 1:2, so our game plan is to risk 2% on each trade for a potential 4% return.
If you want to learn more about Risk Management, make sure to watch my video on that subject below.
Tip #2 Day Trading Is The Best Option
Before I explain why we should only focus on day trading in this case, we need to ask ourselves, “What’s the best way to grow our smaller account?”
The answer to this can only be to target for around 5-10 trades daily. So, it’s the only logical option to select day trading for this journey.
Focus on a system that trades around 5 and 15-minute time frames; everything higher than that will usually result in fewer trades than we need. While everything below 5 minutes can be hard to make profitable due to spreads and commissions. (I do not say it will not work since my leading Dax trading is on M2, but for FX using anything smaller than M5 on MT4 it is hard to make profitable.)
So, check your arsenal of systems and find the best one to use.
Tip #3 Do not Limit Your Daily Potential
Mostly, I agree with forcing people to have some targets for the day, week, month. But now when we are talking about how to grow a small account fast, you should not limit yourself in any way.
You should always have some rules, do not get this part wrong. But you cannot force yourself to stop trading if you make, let’s say $20 on that day.
Here are the rules you must have: Maximum Daily Drawdown, Maximum Lossing Positions, Maximum Open Positions.
Max Daily Drawdown (MDD) – It is not the point to risk your entire account on a single trading day. Try putting a limit on yourself. If you reach it, walk away from your desk, and do something else. Trading for revenge will not work (since we’re talking about smaller accounts, think about 5-6% for MDD).
Max Losing Positions (MLP) – Not all the trades will be winners; that is normal. Our job relies on probability, and what I found is that after 3-4 losing trades, my mind will start going for that revenge trade. So that is what I want to eliminate and why you must stop trading if you hit your maximum MLP amount. (I suggest 3-4 trades max.)
Maximum Open Positions (MOP) – This is self-explanatory: We want to ensure a good number of positions that we can manage effectively. In my experience, having five positions is OK. Anything more than that will be hard to track, especially with Forex. It is going to be complicated. So, stick with five positions, and if you find some better setup, check if you can close something in your books or wait for the next day. You are always going to have tomorrow, so do not try to rush the process.
Tip #4 One System Per Account Rule
We touched on this already: that you should pull all your best systems for this job, but my experience tells me that it is much wiser to stick with one system per account. The simple way to do it is if you plan to use three different systems, separate your account into three sub-accounts and use each system on one account.
The main reason for this is to help you filter a trade better. You will see after the first few weeks what systems are working and what strategies are not performing now, so you can quickly force the systems working right now the best.
Remember, not all systems are designed for all market conditions, so your goal is to try to use the best method for right now. Not something that worked last year, but it is not working currently.
Tip #5 Keep Investing Your Profits & Do Not Spend It On Things You Do not Need
This tip should be obvious to most people, but I still want to explain my thinking behind it. I was the first one who made a mistake here, so you do not need to copy that. Once you start earning, you should not waste profits on stupid stuff like buying a new car or a new screen.
If you want to grow your account fast, you should always keep the money in your account or try transferring your profit each month to a separate account that you will trade.
Remember, you do not need a fancy set up to become a trader, and if you want to invest in your equipment, try not to invest more than 10% of your monthly earnings; anything more than that will result in stopping your primary goal: growing your small account!
Tip #6 Use Prop Funds for Scaling Faster
Prop Funds are the best option to grow your trading account size in the shortest possible time, but you must make sure you are ready before you dive into that kind of trading.
When we say Prop Funds, most people think that it is the company that gives you money to invest, which is partially true. Prop Funds do not look for a trader who will grow accounts fast. They are aiming for a consistent individual who can earn around 5% monthly.
When you prove to yourself that you can consistently earn 10-15% for a minimum (and I mean, minimum) of 12 months in a row, think about working with a Prop Fund.
Because working for Prop funds can be great since you can get up to $1M in funding, and after 6-10 months of being successful, you can easily save $50-100k to trade on your own.
We will cover more about Prop Funds trading in the future, but I just wanted to keep that as a potential option. Do not try it without a year in consistent profits.
Conclusion
Growing a smaller trading account is not a problem. It will involve a little more aggressive approach and force you to work, but if you want to be a successful trader, go for it.
Remember that every good trader started from a small account. We just worked our way to a more significant number; there is no shortcut here. 😊
Enjoy the process. That is the most important thing.
Regards,
Nicola
