Most forex traders started small. This fact often blamed as the reason why beginner traders fail; their capital is just not enough to withstand the risks, or so they said. However, it is simply a case of not knowing how to manage forex trading with small start-up capital.

Most forex traders started small; either by registering to broker who offers no deposit bonus or depositing minimum amounts of money into standard account. This fact often blamed as the reason why beginner traders fail; their capital is just not enough to withstand the risks, or so they said. However, it is simply a case of not knowing how to manage forex trading with small start-up capital.

Trade
Forex trading with small capital means that if somehow trader suffer losses, it will not be so great that he will kill himself; but it also means that forex trading become somewhat more tricky at the same time. Still, 'tricky' does not necessarily impossible. There are a few things you can do to specially manage forex trading with small capital.

 

1. Focus On Strategy, Ignore The Result

Don't dream to get 1,000 USD in a month with mere 10 USD initial deposit. Be realistic. The purpose of going in to trade forex with small capital is to first try out your strategy, not to gain profit as much as possible. Pile your profit little by little, and practice extra strict risk management. Take pride from being able to establish your strategy and firmly apply good money management, instead of from the amount of money you get from each trades. Concentrate on getting in and out of the market at the right moments, instead of on increasing the size of lots traded.

 

2. Conservative Money Management

One of the most popular money management is the Two Percent Rule. It is a trading practice where trader should use no more than 2% of his capital in a position. For example, if you have 10 USD, then you should only use 0.2USD (20 mini lots/200 micro lots) in a single transaction. There are other rules, but the Two Percent Rule counted as one of the most conservative, thus this is what you should use in managing your positions. Additionally, do not be tempted to use all of your free margin to open positions; you'd do better to open positions only one or two at a time.

 

3. Don't Go Against Fundamental Sentiments

There are trend following traders and there are also traders who like to go against the trend. However, as a beginner in forex trading with small capital, it will be dangerous for you to go against long-term fundamental sentiments. Let's say the current sentiment is bullish USD, you will do better by going with selling EURUSD from resistance levels rather than following technical indicators that could be fake. At least, fundamental sentiment provides reason for prices to fall at later date although at first it went up. Of course, prolonged floating positions could endanger your account as well, so you should consider your place carefully before deciding to close or float a certain position.

 

4. Keep Trading Journal

Keeping trading journal is a good way to trade responsibly. In a trading journal, you can establish your trading plan, strategy, as well as evaluating previous trades. This is especially important if you trade forex with small capital, as you will have to keep track of your trading strategy. Trading journal also ensures you will practice good money management and detect any mistakes on your part.

 

5. Keep Cool Head

With small capital, you will almost certainly going to be impatient. Why do price went down when I buy this pair? Why did I hope for bigger profit and did not close the trade yesterday? And so on. If you let yourself be trapped by those negative emotions, then you are going straight to margin call (MC). So keep your head cool, believe in your strategy. Make improvements only when it is necessary, not every time your trade get in a loss. Keep in mind that emotions are the enemy of forex traders everywhere. Successful traders always stay calm and keep holding on to their trading strategy even when they experience unexpected crisis.

 

In forex trading, experience is invaluable. One reason why many traders fail is that they trade when they still knew nothing, but stopped when they are still starting to gain experience. In order to minimize risk, they traded forex with small capitals and mini lots, but irrationally sought high gain without considering the efforts needed to get it, and then quit afterward when they failed to reach their target. Don't turn yourself in just to experience meaningless failure; when you are only prepared to provide small amount of initial capital, prioritize learning over profits. Little by little, those small profits you have made will build up into priceless experience.