Whether we’re tinkering around with our demo accounts or twiddling with a number of dollars in our live accounts, it has never been removed from our minds that our accounts are going to make it big in the longer term.
Unfortunately, many traders have difficulty taking the subsequent step and trading greater positions.
Some find it hard to risk wiping out the small profits they’ve worked hard for within the last couple of months, while some just can’t stomach risking greater positions.
Taking over more risk definitely has its perks. But be warned…
While it may offer you greater wins, increasing your risk can just as easily magnify your losses and wipe out your entire account.
To avoid the pitfalls of trading big, I’m sharing three easy tricks to guide you with increasing your risk:
1. Ensure that you’re within the green
Don’t even take into consideration increasing your risk for those who’re not even consistently profitable with trading small.
If you happen to can’t successfully trade small forex positions, what makes you’re thinking that you’re gonna have any luck trading greater ones?
If you happen to think and feel that you just’re ready but your account continues to be within the red, think about pulling it back within the green first. That’s what demo and small accounts are for anyway.
Keep trading small positions until your performance justifies trading greater. In any case, you don’t need to compound your losses with greater position sizes.
2. Take it slow and regular
Just as you wouldn’t rush to fight elite world champions just a number of days after taking your first boxing lesson, you shouldn’t rush yourself into increasing your trading size.
You don’t need to bite off greater than you possibly can chew, do you?
Taking a gradual approach towards increasing your forex position sizes is the important thing to becoming comfortable with taking a bigger risk.
If you happen to’re not completely comfortable with the quantity of risk you’re taking, likelihood is, it’ll show in your account balance.
So somewhat than make one big leap, go for small, regular increases. It’s less prone to have an antagonistic effect in your trading mindset, and it’ll mean you can adjust to larger risks more easily.
3. Concentrate on percentages somewhat than dollar amounts
I’ll allow you to in on a little bit trading secret that’ll allow you to adjust to larger trading sizes:
Concentrate on percentages somewhat than dollar amounts.
Risking 1% on a $10,000 account is similar as risking $100. Then again, risking 1% on a $100,000 account is corresponding to risking $1,000. By risking the identical percentage on a bigger account, you’re mainly trading larger.
It also helps to place profits and losses in the right perspective if you concentrate on percentages.
Losing 1% on a $100,000 account won’t feel too different from losing 1% on a $10,000 account. But if you put it in raw dollar terms ($1,000 versus $100), it’s rather a lot harder to stomach.
You must have the ability to transition to trading greater trading positions with no hitch for those who take it slow and regular, and concentrate on percentages somewhat than dollar amounts. But above all, don’t make the error of accelerating your risk for those who’re not yet consistently profitable trading small.