socomrider
Newbie
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Hiya,
I specialise in small accounts. I've never been fortunate to have a lot of capital to play around with, and when i do make gains the money is often needed. However, i have managed to build up my capital- just very slowly.
You are right in not putting impossibly tight stops on just because you don't want to risk more than 2%. These rules just don't work with an account below about £1000. Saying that, you don't want to have large stops either as a few losses will wipe you out. I find that having a smaller account makes you more disciplined because you have to make every trade count and will not enter a trade unless you are very sure you are right. I'm not saying that things don't go wrong- they often do.
On small accounts i find breakouts a good way to trade. You can maintain a tight stop on breakouts, whilst at the same time maximising potential returns. e.g. you might be able to place a stop at 5 to 10 points, yet the return could be around 60 points or more. (i usually aim for 30, then close out half the position- some SB companies allow you to close part positions so you are holding less than the minimum bet... eg. minimum bet is £1/point... close £0.50p/point and you now only have £0.50 a point bet. You pay more money in spreads doing this so be careful).
Even though i have more trading capital available to me elsewhere, i tend to keep fairly small balances in my SB accounts even now because it just makes me take better decisions. Saying that, there has been a couple of occasions where a brilliant setup has come along and i saw huge profit coming yet was unable to take a large position due to lack of immediate funds.
Not sure what i'm writing here -think it's a load of drivel. So excuse me if it doesn't make sense. I'll stop now.
I think my main problem is as soon as I see profit I fail to sit tight. For example going long on the Eurex (with it's bullish behaviour has given me the most profit) for a few days I sat at negative figures and because I started to worry I closed as soon as I started making profit, which eventually would of made me much more had I stayed in.
My plan has always been, though, to do as you say and take small profits which hopefully will give me the capital to play in the bigger markets. Having tasted forex today I think i'm hooked which will be either a good thing or my downfall