Nobody likes to get unsolicited advice, especially when people tell what to do and think that they know better: “you should do it this way”, “no, you're doing it wrong”, “it won't work if you…”
We know it can be annoying in your everyday life, but in trading, there are certain rules that you have to observe. And we are here to tell you exactly what to do, or rather – what not to do to finally start earning. Just hear us out, and then make your own decision.
Most novice traders make the same mistake when they decide to dive into the world of financial markets and start making money by trading online. They think that they can make good money starting with just $100. Yes, most brokers will allow you to start trading with this amount. But it's the minimum required deposit. Just because the broker allows you to start with $100 doesn't mean you should. The brokerage may have its own reasons for that. You're here to make money, so be prepared to invest some!
“But my income isn't enough, I can't afford to deposit a large sum of money at once” – you may argue. Well, let's get this straight. Why did you decide to start trading in the first place? To achieve that sweet financial independence, right? But trading with just 100 dollars isn't an option.
“Don't tell me what to do!” – you'll say and deposit $100 into your trading account to prove us wrong. Let's consider this scenario when you do succeed and make $1000 out of $100. What would you need to achieve that?
To turn your $100 into $1000 you would need to open 4 profitable trades in a row with zero losing trades in between. Also, you'll have to maintain the 1-to-2 risk to profit ratio. Piece of cake! – you'll say. Four successful trades are not that many. Maybe, but there's one more condition, that we have yet to tell you – you will need to bet your entire deposit in each of these 4 trades.
Do you still want to try and prove us wrong? Alright then, let's get started. You open your first $100 trade. The luck is on your side and you make $200. Cool! You now have $200 in your account and you bet your entire deposit again. The market goes in your direction and… way to go! You make a $400 profit. But you need $1000, remember? It's time to open your $400 trade and you get cold feet. You start hesitating – “What if I lose this time? What if the price reverses and goes in the opposite direction just a couple pips away from my take profit? What if my trade closes by stop loss?” “What should I do?” – you'll finally ask 🙂
Exactly! As you make more money you become more cautious – you don't want to lose all of it in one trade. And you don't have to! You don't need to risk everything and go all-in in every trade. Now that you've come to your senses, let's cast away the fantasies and look at a safer and easier way:
Start saving up. Save around $100 every month from your salary. To trade successfully and make money you need to invest it first. It's part of the process. Deal with it.
Once you save at least $1000, start trading. Open positions with $10-$50 volume and earn your $20- $100 safely. This way, you won't need to risk your entire account balance. Be smarter than other beginner traders. Don't make this mistake and indulge in fantasies that you'll become a millionaire by starting with just $100. It just won't happen. Now that you understand it, open your 0.5 lot trades and you'll be golden!
Provided by AMarkets