ACCELERATION OF A SMALL DEPOSIT
Today I want to talk about a topic that every novice trader has to face.
Most beginner traders save up money to make the first deposit and very often this amount is too small for trading, but the broker gives you the opportunity to trade anyway, why is that?
The fact is that the smaller the deposit, the easier it is to lose them, and the broker knows this.
Therefore, for calm trading, you need an amount greater than $100 or $500.
The optimal amount to start trading is $1000
What is the danger of a small deposit?
Beginners can be anyone from a student to a businessman.
And very often the initial funds will be small, because the reason people come to the market is to make money!
A person invests $10, not because he is greedy, but because there are simply no more free funds.
At the same time, the trader is already dreaming of millions, and his head begins to spin from such thoughts.
As a result, deals are opened for $1, then for $2, and in the end all the money is lost.
The market does not bring quick profits.
It is also impossible to deposit the last money or money borrowed.
All this will only lead to the drain of the deposit.
1000$?
Why $1000 is considered the best start?
This question can be answered by the rules of money management.
Everyone remembers the rules of risk, let's say you decide not to risk more than 5% on each trade.
When trading intraday, the position size is 20-50 pp., that is, when trading micro-lots of 0.01, the risk per trade will be $2-$5. Such a risk is acceptable for a $100 account, since then it will be 5%.
When trading on daily timeframes, the average risk is even higher: 50-100 pp. (5-10 pp.). In this case, the account must be at least $200. As you can see, money management clearly indicates the minimum deposit size.
This is when trading micro-lots.
As a rule, traders use standard lots because they want to make quick money and it is very risky.
Therefore, you should not start trading with $10 or $200.
It is better to save and collect the required amount, or at least $500, and then it will be easier to trade.
But what if you can't wait?
How to disperse the deposit?
There are a couple of rules:
A trader must have a working trading strategy that has proven itself well on a demo account and on a real account;
Comply with risk management rules;
Provide a deposit amount of $200-$400.
Subject to these conditions, you can “softly” disperse the deposit.
Overclocking
With a quick acceleration of the deposit, the risks increase, you must understand this.
Here are three principles that make it possible:
The risk per trade is set higher than in the classic MM, and can reach 10%;
If the trade is unprofitable, the risks are not doubled;
When the deposit is broken up to the set limit (for example, from $200 to $500), the trader returns to the previous risk of 5% and trades for several months in compliance with Money Management rules. Then you can repeat the "acceleration".
pyramiding
A popular way to accelerate a deposit is Pyramiding, the meaning of which is to add positions.
Here's how it goes:
You determine the main trend on the daily timeframe and open a position following the trend.
Then wait for another signal indicating the continuation of the trend.
If there is a signal, open another position along the trend. The protective stop-loss order of the first order is transferred to the opening level of the second order, that is, to breakeven.
The size of the take profit on the second trade should be small, because the trend can change direction at any time.
It is important to remember that this strategy only works if there is a trend, so a flat or correction should be avoided.
Outcome
Trading this way is very risky.
The best way is to raise an amount equal to or greater than $1,000.
Then trading will become less dangerous for you, since you can use the standard money management rules.
Before dispersing the deposit, you must set yourself a goal, after reaching which, be ready to use the standard risk rules.
Big risks are rewarded, but even they need to be taken with intelligence and control.
Good luck!
Most beginner traders save up money to make the first deposit and very often this amount is too small for trading, but the broker gives you the opportunity to trade anyway, why is that?
The fact is that the smaller the deposit, the easier it is to lose them, and the broker knows this.
Therefore, for calm trading, you need an amount greater than $100 or $500.
The optimal amount to start trading is $1000
What is the danger of a small deposit?
Beginners can be anyone from a student to a businessman.
And very often the initial funds will be small, because the reason people come to the market is to make money!
A person invests $10, not because he is greedy, but because there are simply no more free funds.
At the same time, the trader is already dreaming of millions, and his head begins to spin from such thoughts.
As a result, deals are opened for $1, then for $2, and in the end all the money is lost.
The market does not bring quick profits.
It is also impossible to deposit the last money or money borrowed.
All this will only lead to the drain of the deposit.
1000$?
Why $1000 is considered the best start?
This question can be answered by the rules of money management.
Everyone remembers the rules of risk, let's say you decide not to risk more than 5% on each trade.
When trading intraday, the position size is 20-50 pp., that is, when trading micro-lots of 0.01, the risk per trade will be $2-$5. Such a risk is acceptable for a $100 account, since then it will be 5%.
When trading on daily timeframes, the average risk is even higher: 50-100 pp. (5-10 pp.). In this case, the account must be at least $200. As you can see, money management clearly indicates the minimum deposit size.
This is when trading micro-lots.
As a rule, traders use standard lots because they want to make quick money and it is very risky.
Therefore, you should not start trading with $10 or $200.
It is better to save and collect the required amount, or at least $500, and then it will be easier to trade.
But what if you can't wait?
How to disperse the deposit?
There are a couple of rules:
A trader must have a working trading strategy that has proven itself well on a demo account and on a real account;
Comply with risk management rules;
Provide a deposit amount of $200-$400.
Subject to these conditions, you can “softly” disperse the deposit.
Overclocking
With a quick acceleration of the deposit, the risks increase, you must understand this.
Here are three principles that make it possible:
The risk per trade is set higher than in the classic MM, and can reach 10%;
If the trade is unprofitable, the risks are not doubled;
When the deposit is broken up to the set limit (for example, from $200 to $500), the trader returns to the previous risk of 5% and trades for several months in compliance with Money Management rules. Then you can repeat the "acceleration".
pyramiding
A popular way to accelerate a deposit is Pyramiding, the meaning of which is to add positions.
Here's how it goes:
You determine the main trend on the daily timeframe and open a position following the trend.
Then wait for another signal indicating the continuation of the trend.
If there is a signal, open another position along the trend. The protective stop-loss order of the first order is transferred to the opening level of the second order, that is, to breakeven.
The size of the take profit on the second trade should be small, because the trend can change direction at any time.
It is important to remember that this strategy only works if there is a trend, so a flat or correction should be avoided.
Outcome
Trading this way is very risky.
The best way is to raise an amount equal to or greater than $1,000.
Then trading will become less dangerous for you, since you can use the standard money management rules.
Before dispersing the deposit, you must set yourself a goal, after reaching which, be ready to use the standard risk rules.
Big risks are rewarded, but even they need to be taken with intelligence and control.
Good luck!
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