Growing Startup Capital for Forex Trading- Impatient Mentality
Hello there, buddies!
How much money do you really require for trading?
In my previous piece, I covered the misunderstandings some traders have about the need to start trading with $1,000.
Let me explain it to you in simple terms. A trader with a $1,000 account can afford to use a 1.00 lot size on a transaction without breaking his risk management rules and still make a fair profit, but a trader with a $200 account may not be able to do so owing to risk management.
Yes, such a trader may still benefit from such a trade, but the profit margin would be smaller because of the smaller lot size. Check out here for an article written by the academy on the meaning of lot size.
The statement I just made has been widely misconstrued, leading some traders to regard Forex trading as a get-rich-quick scheme.
For example, Trader A, who had a smaller capital, had noticed that his fellow trader, let’s call him Trader B, had made a larger profit simply because the trader had a higher capital and, thus, employed a larger lot size.
Let’s say both traders entered a 10-pip deal, with Trader A using a 0.1 lot size and Trader B using a 1.0 lot size. Naturally, the former earned $10 and the latter earned $100.
All this was detailed in the blog post above.
Because of a lack of correct trading psychology, disciplined risk management etc. Trader A becomes greedy and wants to make as much money as Trader B, despite his lower capital. Boom! Trader A continues to trade and do other hazardous things until he loses all of his money, and we still see Trader B standing firm and likely scaling higher every day.
What other problems did Trader A have?
For more on this story, stay tuned for my future post.
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Conclusion
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