Should i take large risks when developing a small account??

Attila the trader

Active member
192 19
HI , my portfolio is up by 33% this year( since late September) , but I have a small account, and since the dollar value is low even a 100% gain over a year would not feel like much.
should I engage in more volatile trades and try to get the account up to a decent level, before slowing down and taking less aggressive trades; or should I continue on this slower and safer path ,slowly adding more funds to the account as I receive it from other sources. I'm not trying to get rich quick nor be greedy.
 
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sebking1986

Well-known member
284 87
No, this is what trips many up. They get some success and take more risks to be more aggressive in the assumption that this success continues. Higher risk means more chance of failure. It is as simple as that. Stick to what you are doing and submit to the time it will take for compounding to grow your captial. If anything lower your risk then.
 

dusktrader

Junior member
28 13
I have to agree... depending on your definition of "small account". I consider my accounts small, but at the same time I consider these active research accounts. In other words, I want the money fully utilized.

I have come up with my own way to divide risk and I like how it works so far. So you may also want to consider creative ways. In my case, the research account(s) are for learning only, and to me I'm ok if they lose even 100%. If the equity falls unexpectedly I will cry, but that's about it. Then I'll take a breather and re-fund the research account(s) to try again.

So I currently have 10 research accounts each of size $1000. Inside each account I allow only 1 pair to trade. Each account has it's own different pair to trade. In my trading style I trade 20% of the account equity per trade. Feels meaty, and can give a nice wild ride when the bot is working.

But in other math, this is actually placing 2% equity at risk per trade. 20% of $1000 is 1/5th of the account, or 1 equity unit out of 50 possible units in all accounts.

Anyway, hope this doesn't confuse. Mainly I just wanted to suggest that you could get creative with your risk management, depending on what you expect from the account. In my case, I expect the fastest learning experience possible, and I'm willing to get burned to get there faster.
 

Attila the trader

Active member
192 19
No, this is what trips many up. They get some success and take more risks to be more aggressive in the assumption that this success continues. Higher risk means more chance of failure. It is as simple as that. Stick to what you are doing and submit to the time it will take for compounding to grow your captial. If anything lower your risk then.
but if I continue at this rate, it would never grow to a useful amount without external funds, I agree that past successes does not guarantee future wins. but i would have to at least 3X my account to make those 10% 20% wins count
 

Attila the trader

Active member
192 19
I have to agree... depending on your definition of "small account". I consider my accounts small, but at the same time I consider these active research accounts. In other words, I want the money fully utilized.

I have come up with my own way to divide risk and I like how it works so far. So you may also want to consider creative ways. In my case, the research account(s) are for learning only, and to me I'm ok if they lose even 100%. If the equity falls unexpectedly I will cry, but that's about it. Then I'll take a breather and re-fund the research account(s) to try again.

So I currently have 10 research accounts each of size $1000. Inside each account I allow only 1 pair to trade. Each account has it's own different pair to trade. In my trading style I trade 20% of the account equity per trade. Feels meaty, and can give a nice wild ride when the bot is working.

But in other math, this is actually placing 2% equity at risk per trade. 20% of $1000 is 1/5th of the account, or 1 equity unit out of 50 possible units in all accounts.

Anyway, hope this doesn't confuse. Mainly I just wanted to suggest that you could get creative with your risk management, depending on what you expect from the account. In my case, I expect the fastest learning experience possible, and I'm willing to get burned to get there faster.
I have a 4 figure account , my goal is to get it into lower 5 digits , so i can trade less aggressively , i definitely dont want risk as big as your research accounts!
 

No_Fear

Newbie
6 4
I have a 4 figure account , my goal is to get it into lower 5 digits , so i can trade less aggressively , i definitely dont want risk as big as your research accounts!

It depends on if you are willing to take a chance to blow up your account for a chance at 5 digit. Like if you can top it up with money from your salary easily then you can try to be more aggressive then usual.

But you will have the same mindset when you reach 5 digits you can easily lose it all.
 
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Henow1969

Well-known member
316 43
It depends on the type of trader you want to be. With a leverage of 1:100, you can start with $100 but just don't get greedy, as your gains will be too small and people tend to take bigger risks to flip their account.
 
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sebking1986

Well-known member
284 87
but if I continue at this rate, it would never grow to a useful amount without external funds, I agree that past successes does not guarantee future wins. but i would have to at least 3X my account to make those 10% 20% wins count
Then trade sustainably and add small amounts of external funds as and when you can. This will be more sustainable than using higher risk I promise you. Capital preservation should always be priority one. Successful traders focus on mitgating risk first.
 
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Egads

Junior member
27 4
It depends on you whether you can afford taking risks or not. Small accounts may be difficult to use but if one knows how to use them, then there is no reason why it can’t be traded profitability.
 
 
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