“Because forex trading is ‘new stuff’ for me, I want to try first $ 500. Later if the results are good, I’ll add”
Sentence as above is a sentence that very often I hear. The majority of beginner traders do think like this.
You need to know that forex trading is not the same as online trading. Take a little bit, if you just add new.
No. BIG NO. Forex does not work that way.
Now let’s look at the reality.
It is true that traders with minimum capital ($ 500 for example) also have an opportunity to succeed. I will not conceal that fact. In fact I agree with the statement. But in reality the population of such traders is also small and only filled by traders with quality “super”. If you are a trader with super quality, please enter the population.
But clearly flexibility strategic with minimum capital will be far below the larger capital. Let’s take an example.
Suppose there are equally good opportunities in multiple currency pairs at once, at the same time. When the capital is very small, it is not enough to open positions in all the pairs at once because of pre-made trading plan deter you. Because the capital, eventually you are forced to choose one pair that you think has the greatest potential to generate profit.
But if you are “wrong select”, because you actually experience loss. Meanwhile, if you open a position on another currency pair, should get a profit. Often the profit can cover the loss position in the other pair.
At that time you will realize that if at least twice the capital owned, then at least you can open two positions in two different pairs without worrying overtrade because all have been taken into account in the trading plan.
Another case, will be quite frequent (if you are disciplined on a trading plan) encounter conditions in which you can’t trade even though the signal or chances are pretty good because the stop loss exceeds your risk tolerance. The illustration below may be a reference.