Schools of Thought On Trading With Small Account Sizes
I just got done writing a blog post about asking the right questions as a newer trader, which you can find here, and I started thinking about how most newer traders are severely underfunded. This certainly is not a new concept to me--after all I have a lesson in the Price Action Course which talks exactly about account sizing and I too was once an underfunded newer trader-- however I wanted to take a few moments to share my stance on this topic as well as explain the positions of two of my trading friends.
An Advocate For Small Account Sizes:
A trader who I actually met through a trading website, Dan, has a project in which he takes a small account size and tries to grow it into a larger account to demonstrate that it is possible to start out trading small and grow into a larger trader. Dan's project does quite well, and he certainly feels that you can begin trading with a smaller amount of money and be successful.
An Opponent To Small Account Sizes:
Another trader who I know, Tim, basically tells newer traders with small account sizes to go raise some extra capital for a few years before trying to trade. He believes that traders with small account sizes are exposing their selves to added risk and are not likely to succeed as traders. Tim is a successful trader himself who started our relatively small, however he acknowledges that the odds were against him at the start.
My Stance On Small Account Sizes:
This is a topic that I have thought long and hard about, and I am somewhat on the middle road as far as my opinion on the subject. While I do believe it is possible to be a successful trader with a small account size, I do believe that the odds are against you (especially without a proper trading education which most small account size traders don't spend the money necessary to get educated before jumping into the markets) . However I also don't believe that you need to have a huge account size to be successful as I myself started out with a relatively small account, however I will admit that it was much more challenging to be a trader with a small account size.
Additionally, when I see things like Dan's project of turning a small account into a larger one, I have to look at the fact that Dan has over 10 years of trading experience under his belt, which a trader with a small account size won't have, so Dan knows how to properly manage his trades and his money.
I think the bottom line on this topic is if you are going to start out trading with a small account size, seriously save yourself the small amount of money that you have in your account and get a proper trading education--whether you rely on 123LearnToTrade's courses and coaching or a trusted 3rd party--just make sure you get educated. I believe it is important for all traders to have a proper education, however I think it is extremely critical and the only saving grace for small account size traders as they don't have much room for beginner mistakes.
Nice post, definitely gave me a good idea of where i'm heading. I think I'll choose the middle road between yours and mine, never fun without mistakes. I think it'll give me more incentive to break through my learning curve by putting real $$ on the line. Thanks for the insight.
There is certainly more incentive to learn and take action when money is on the line, so I do think that going live is better than demo trading in that respect.Originally Posted by cauyeung
good post brendan and i like your site. I have been doing demo for a while now after dabbling in live about a year and a half ago. (I didnt go that well but luckily i wasnt trading large sizes so I lost minimal, and not to mention i didnt have a clue what i was doing)
I mean it feels like i am getting no where really. There is something that seems to ring true about NOT staying on demo for ever as i believe i might be falling victim to being counter productive and staying on demo for way to long and not going on live where you really learn.
( i guess its one of those things where if you listen to group x , they say oh no you have to demo until you can have a huge account and are profitable for a long time, but then group y might say another thing such as best to play on a low risk live account and build your way up ) Thats the internet for you though, its easy to get caught up in everyones thread on a forum with different views etc.
Yet I think as you say, you still need to be educated and know what your doing to be able to go live.
Its frustrating, ive been trying my best to read everything I can but yet i still havnt found a way to trade that suits me and that makes me consistant. Ive been doing this for over a year as well.
I think you would be a great mentor so I plan to read more about your course and hopefully I can start to gain a clearer picture of how markets work and how to find high probabilty trades, instead of what I am currently doing, ie waiting weeks and weeks just for 1 setup that i always get burnt on regardless of what i do it seems.
anyway take care and look forward to participating on your site
Hey Supermatt,good post brendan and i like your site. I have been doing demo for a while now after dabbling in live about a year and a half ago. (I didnt go that well but luckily i wasnt trading large sizes so I lost minimal, and not to mention i didnt have a clue what i was doing)
I mean it feels like i am getting no where really. There is something that seems to ring true about NOT staying on demo for ever as i believe i might be falling victim to being counter productive and staying on demo for way to long and not going on live where you really learn.
( i guess its one of those things where if you listen to group x , they say oh no you have to demo until you can have a huge account and are profitable for a long time, but then group y might say another thing such as best to play on a low risk live account and build your way up ) Thats the internet for you though, its easy to get caught up in everyones thread on a forum with different views etc.
Yet I think as you say, you still need to be educated and know what your doing to be able to go live.
Its frustrating, ive been trying my best to read everything I can but yet i still havnt found a way to trade that suits me and that makes me consistant. Ive been doing this for over a year as well.
I think you would be a great mentor so I plan to read more about your course and hopefully I can start to gain a clearer picture of how markets work and how to find high probabilty trades, instead of what I am currently doing, ie waiting weeks and weeks just for 1 setup that i always get burnt on regardless of what i do it seems.
anyway take care and look forward to participating on your site
I think you are getting to be on the right track. There great thing about the internet is anyone can post anything, however that is also one of it's weakest points as well. There are probably thousands of trading sites and forums, and everyone has their own opinion on how to do things (even those that shouldn't be teaching in the first place).
A lot of other forums I have been part of and no longer participate on are full of "traders" that are really guys with full time jobs that trade once a week or guys that just trade on a demo. While I believe you can trade with a full time job and demo is important for learning certain concepts, I do not believe those individuals should be the ones claiming they "know how to teach new traders" and the ones that even would get into arguments with me over things such as demo trading.
I think there is a time and a place for demo trading, and actually am about to write a blog post about that later today as I think it is an important topic that I haven't talked much about in a while.
As for the course, I think it will help you have some substantial and concrete direction in your trading. There are a lot of very easy to follow methods and work extremely well, and you can make them a part of your overall trading and trading plan.
Glad to have you on the site
-Brendan
Posting Permissions
Reply With Quote
Bookmarks