Home Trading Strategies Costly Mistakes to Avoid When Trading Small Account

Costly Mistakes to Avoid When Trading Small Account

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Costly Mistakes to Avoid When Trading Small Account

hey hey what’s up my friend so in today’s episode I want to talk about the costly mistakes to avoid when you’re trading a small account mistake number one right not adding funds regularly to your account let me give you an example let’s say you have a $5000 trading account you earn an average profit of about 20 percent a year for the next 20 years after 20 years right that account will grow to about one hundred and ninety one thousand dollars not too shabby but what if you add an additional $5,000 to your account every single year for the next 20 years and again you grow that account and the same twenty percent a year how much would that be worth now well based on the compilation and made earlier it’s about 1.

3 million dollars it’s more than six times right what you had previously had you not add funds to your account so the first mistake to avoid is that you know you want to add funds right you account regularly right don’t make the mistake of you know just putting money and then back there and try to let it grow to like six or seven figures it can happen it may happen but if you want to grow your money faster you want to add funds regularly to your account mistake number two right you have the wrong expectations about treating so often traders they might start with $1,000 account right nd they think that okay my account is relatively small all I’m just hoping to make is five fifty dollars a day but yes fifty dollars a day right but here’s the thing right your expectations of the market is a is irrelevant right the market doesn’t care what you want out of it by trying to say no you wanna make fifty dollars a day that’s like saying that your trading strategy has to work every single day now let me ask you would a trading strategy work all the time would he work every day well for a strategy to work all the time it means that market conditions cannot change but as you know I just pull out any charts you know that market conditions they change all the time market goes running uptrend or downtrend range breakout pullback low volatility high volatility etc market conditions are always changing so what this means is that it doesn’t matter how small right your expectations of the market is right home hold little right you want a profit from the machi it doesn’t matter because your trading strategy is not gonna work every single day doesn’t matter whether you and five dollars a day fifty dollars or five thousand dollars a day it’s not gonna care about what you want out of it okay so don’t make the mistake right of expecting to make a profit from the market every single day no matter how small that profit is because your trading strategy well it’s not gonna work all the time not every day maybe not even every week or every month mistake number three you think in terms of dollars so I get it right with a smaller company let’s say a thousand dollars in you maybe you make three hundred dollars for the year you might seem that man that’s a pathetic return right you work so hard for oh your plan disciplined risk management all just for three hundred dollars a year that’s ridiculous but if you think about this right net $300 is 30 percent of your capital you actually make twenty percent for the year and that’s a return the most if not all not only see all my most fun managers would kill to have for a year and here’s the thing right with a small account I get it it’s very easy to look at know how much you earn right on a nominal pieces that’s why you’d want to look at your returns on a nominal basis you want to look at it in terms of your percentage returns right in fact a better way to achieve gauge of performances in terms of art because percentage there’s a a downside is that if you let’s say risk 50% of your account you make a 1 to 2 ratio ratio that’s a hundred percent written right might seem like a lot but that’s because you took a lot of risk to get there so a better way to gauge your performance is in terms of our I think this is a matrix that is actually shared by a dr.

van top so how does our multiple work so let’s say you risk a dollar and you make five dollars the our multiple gain on that trade is five dollars which is your profit divided by divided by your initial risk $1 so that’s a gain of five or let’s say you risk five dollars they make twenty dollars that’s a gain of four are you get a picture so what you have to do is that every year we’re at your the template how many are you’ve earned right from your trading all right so let’s say you make twenty five are in a given year right I’ll see that’s pretty good because if one R is wolf one percent of your commnets pretty much twenty five percent return for a year and if one our ear is two percent of your account that’s pretty much 50% return for a year so using the are multiple approach right it’s a more objective way to a gauge your performance are especially when you’re trading a small account okay so with that said I have come towards the end of today’s episode if you’ve enjoyed it right hit that thumbs up button and subscribe to my youtube channel the link is all below and I will talk to you soon you

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