Hey hey what’s up my friend so welcome back to today’s episode where we will be discussing write the Mystics that you want to avoid when trading a small account I get it right most of us me included I started off with a really small account and a mistake that many traders make is number one they ting in terms of the dollar amount so let’s see for example you put in $100 into account $100 and maybe you make a trade and you’re in $10 on the tree and you only run into yourself so much time and effort energy to learn all the trading stuff out there and make DeeDee RSI the chappathis the price section for just ten dollars on this pathetic tree man I’m wasting my time man I rather work at McDonald’s now here’s the thing right if you focus on a dollar amount and yes it can be insignificant right ten dollars can’t even get you a meal at a restaurant but I don’t want you to focus on a dollar amount only to put things in perspective look at it in terms of your risk to reward let’s see for that trick you risk five dollars on the train and you came back ten dollars there’s a risk to reward over one to two or if you put it from a percentage perspective that’s a return of 10% of your capital invested that’s pretty decent okay but if you focus only on a dollar amount at $10 the pathetic $10 all right then yes you’re gonna feel horrible about yourself remember your trading account size isn’t gonna be $100 all the way you’re gonna scale up eventually when you become consistently profitable when you’re confident from $100 to become to a 500 account $1,000 account 10,000 100,000 now in this time run when you do a 10% return you can see how the dollar value changes significantly so when you’re trading a small account don’t focus on a dollar value it is gonna make you feel horrible right so you’ve got to change your perspective I look at it you know in terms of percentage look it in terms of your risk to reward mistake number two many traders when it trade a small account they think that that is an N on Bo I’m going to take this $200 trade in your car and after equal to six figures I’m gonna turn into six figures then I can quit my job go to the beach Seba spinacolada and retire that’s ridiculous try the odds of that happening right it’s pretty much even you know slimmer than playing the lottery it’s very slim what’s dead that could happen to you so mystic na Mathura is that you know you don’t want to just have a small account and just trade it as it is you want to instead add funds to your account regularly over time so let me give you an example why this is so powerful so let’s see for example you have a thousand dollars of trading account okay and let’s say you do an average of 20 percent return each year just just follow with me on this after 20 years right a thousand dollars account will be worth about thirty eight thousand dollars three hundred and thirty seven dollars maybe we’ll arrange man your math is really good man Reena well that’s because I have another screen here that gives me the exact number so don’t be doing pressure I have another screen to to actually give me out the math number that’s really ready for me so anyway a thousand dollars account compounded twenty percent a year after 20 years is wolf about thirty eight thousand dollars three hundred thirty seven dollars now what if you were to this time around add some money to your trading account issue let’s say this time around again you treat with the $1,000 trading account but each year you added an extra thousand dollars to your account that’s a more like that’s not a lot less about like eighty ninety dollars a month right if you think about this so a thousand dollars account and you add extra one thousand dollars to your account each year and again right in same thing right you compound it at 20 percent return a year and after 20 years guess how much this account will be worth well from the looks of things it’s going to be worth two hundred and sixty two thousand dollars three hundred and sixty three dollars can you see the difference one previously it was about thirty eight thousand dollars and now you have about two hundred sixty two thousand dollars all by just regularly adding funds to your account each year that’s the power of compounding and that’s how you get out right of trading a small account not by you know trying to make that one two percent you know and snowball over time yes you can right but if you really want to kind of see the big money you’ve got to be willing to add funds over time to your calm okay next one mistake number three is that when traders treat a small account they don’t treat it seriously top process are they after all there’s only a hundred dollars to come and there’s only two hundred dollars I can afford to lose there now here’s the thing if you have that mindset to start with and eventually when you treat larger mom a thousand dollars five thousand ten thousand guess what that mindset will be brought along to your larger size trading account that mindset will be the same and those habits those top process of yours right then you head back then when trading a small account and you bring it over to trading a large account it’s going to be a disaster so yes I know the account size is small but you gotta treat it seriously because if you don’t nail down the top process correct me write all those bad habits all those mindset will be brought over when you treat a large amount of money and this time around the damage will be even more painful and mistake number four so this largely applies I will see so much to people trading Forex but more for people trading stocks so from where I’m from Singapore you’ll be amazed right to know that the brokers down here right they still charge an average of commission of about twenty to twenty-five dollars per trade so for example I buy 100 shares of one of the local stock down here say SingTel I gotta pay like twenty to twenty-five dollars to buy commissions to the broker and if I sell I gotta pay another twenty twenty-five dollars I mean let’s give me the $25 says a loti it’s a benchmark price point so can you see that if someone here so I don’t hours and ollars account you buy twenty-five dollars in commission you sell another twenty-five dollars in commission that’s fifty dollars that’s about that’s about five percent return right I mean that’s about five percent down right of your from your trading account so this is just from a Singaporean perspective if you’re trading in the u.
s. you’ve got Robin Hood you’ve got all the other stuff like that that will you know have almost zero commission concert so that’s fine for you but beware right people from other parts of the world if you’re trading stocks Commission is still a very real thing right you’ve gotta take that into consideration because again if you have a thousand dollars account you’re paying $50 to Commission it’s gonna be very done difficult right to even break even on your account right and the more you train right the faster your your trading account capital is gonna get eroded so pay attention to the broker that you’re choosing pay attention to the instruments that you’re trading pay attention to the transaction cost right that’s incurring right as a percentage of your money debt or rather as a percentage of the capital that you are trying to invest or trade with that’s important and finally mistake number five many traders da don’t learn from their mistakes right you’re not learning from your mistakes because after all it’s a small economy and rainy you know you know it’s a small I can I can afford to lose it I can afford to you know average into my losses I can afford to widen my stop-loss after I was only a small account so as I’ve said earlier right if you have that mindset right if you don’t learn from your mistakes you keep making mistakes when you’re trading a small account guess what when you create a larger accounting future the Mystics is are still gonna be there you’re not gonna change all right what makes you think that you’re gonna change just because you’re trading a different account sighs no that mindset that top process the bad habits is all gonna be carried over when you treat a larger accounting this way these are so strong strikes right this way you know you’re hurting hard-earned money right I just you know vaporize just like that those money could be better spent on your family your house or whatsoever so yeah don’t treat this like a game I know the money that you’re treating might be small right but whatever mistakes that you’re making right now whatever habits bad habits are you gotta break it right now when you’re trading a small account if you don’t fix it right now you’ll never fix it at all so treat this as a business okay so a quick recap right to the mistakes that many traders make when they treat a small account number one they focus on a dollar amount don’t do that right focus on your percentage return instead focus on your risk relative to returns number two not adding funds regularly to your account number three they don’t treat it seriously number four they choose the wrong broker to trade the markets they are trading the wrong instruments for their given account size and number five they don’t learn from their mistakes and don’t let this happen to you right I know if you’re watching this video right now or this podcast you know that you’re serious about trading in this is not gonna happen to you so with that said I wish you good luck and good trading until next time you
