$10 Challenge – Week 2 Update
Finding a new flow
This week was better for my account balance. I was able to recover most of my losses from the previous week. With this new flow, I have also gained some insight into trading with such a small account.
Last week’s most important tip and we are repeating it this week. Trade wisely and responsibly.
Remember that every open trade eats into your margin. Try not to have too many positions open at once as your broker may close out you in a loss should you have no more margin left.
Actively manage your trades.
When entering a trade on a small account, you must watch the market and time your exit accordingly. Be active on your trades and manage your Stop loss (SL) and Take Profit (TP) based on market movement as well as your strategy.
Choose your time frame
Unless you are using a scalping strategy, it is best to stick to 1 hour and 4-hour time frame. The smaller time frames tend to be more volatile and can give you fake signals. So, unless you are comfortable with the market movement, you should stick to the larger time frame for consistent wins.
Keep in mind that 1 hour and 4 hour requires a bigger SL than scalping time frames. This means that should the trade go against you, you can be closed out as you no longer have a margin to keep the trades open. This is merely done by the broker to protect your account balance.
Anything daily and above is all for long term investments and not advisable for small accounts.
Quality over Quantity
You may miss out on other trade opportunities, but you will have to be strict on yourself as the more trades you have, the bigger your risk. In last week’s update, we touched on the quality of the trades; and confirmed in my trading this week. When growing your account you must note the quality of the trades and not only the quantity.
Knowing when to bank
Have a set TP in place to either close your trades or to partially bank your profits. When choosing the option to bank a portion of your wins, keep in mind your risk and do not move your SL before you have reached 1:1 RRR. (Risk to Reward Ratio).
Have patience – if the setup is not clear, then move on to the next trade. If nothing sets-up then you wait for the next best entry. Sit on your hands and do nothing till then.