What a good trading Tips strategy for small capital?
- Thread starter kittycriston
- Start date
- Watchers 13
The best strategy would be don't spam and get a proper job. They have mcdonalds in your country, no ? They always need someone to flip the cow, pig, or sheep (cross out according to religion) burgers being served.
If you want to trade for a small capital, it is very important to be patient and have a long term perspective. Sometimes it is possible that small cap companies grow very quickly but more often it is a long slow process of many years, you need to be prepared for volatility.
Knowledge is power. Study and learn all you can first. CBOT, INVESTOPEDIA, OPTIONS EXPRESS, supplement with anything that clicks with you like candlesticks or fibbinocci. Sort through all of this just to start, you will have a decent idea of where to head from there. Then pick something with the small amount of capital you saved during that time. If you're extremely lucky you pick a trading method you can stick to and improve. More likely you will first follow a white herring and once that is figured out, you can start to really see how you might be able to trade. Then you follow that direction. During all this save your capital so that you can open a proper trading account and have a great Internet connection. With $50K in hand you can start trading in a meaningful way. I think that would be the minimum if you are in any way serious.
Good luck.
There is also a lot of what not to do displayed in forums such as this. Learning from others mistakes is the best and cheapest lesson.
Good luck.
There is also a lot of what not to do displayed in forums such as this. Learning from others mistakes is the best and cheapest lesson.
Trading tips for small capital; why not trading tips for small villages, small people, small towns or even a big capital
Trading over the last 8 years, I have come to realize the significance of setting targets, during each trade.
Anyone with relative trading experience, is fully aware of how to enter trades but not so comfortable with knowing where to set targets. The profitability of any trade, boils down to the exit.
During a trading position, I monitor and use a number of variables to sell out of a position.
1. Defined Targets
If the current trading range is small, lack of economic news and limited upside potential, I tend to look to sell out of all my positions at one target. This target will be set using Fibonacci extensions, trendlines or next prominent high points (if I am long).
2. Scaling Out of positions
If the market is in a trend, and your intuition and experience tells you that there might be an extended price move in the direction of your trade, then I will set 3- 4 target points (dependent on the amount of lots you are trading), e.g. 4 mini lots with 4 targets. This means that I am selling a mini/micro/large lot, as the price tests each target. In effect, I am maximizing the trading opportunity as it continues to move in my favour.
3. Trailing Stop
This exit strategy according to my system, is based on the premise that you have entered a trade with an objective, of a potential start of a new trend, generally on a larger timeframe 2, 4, 8 hour timeframe. Once the price hits the target levels, I will not sell out of any positions, but trail my stop first to breakeven. This action prevents a loss on the trade, then the next step will be to trail the stop to the first target, as it hits my second target my top will move to the first target. This will continue until the price retraces and hits my stop order. During the life of the trade, no lots are sold out. I am trailing the full trade size and locking in profits as the market continues to increase (trade long).
The above is my view on a part of trading, regardless of your account size. This is by now means the whole strategy (I could be here for ages)
To your success.
Anyone with relative trading experience, is fully aware of how to enter trades but not so comfortable with knowing where to set targets. The profitability of any trade, boils down to the exit.
During a trading position, I monitor and use a number of variables to sell out of a position.
1. Defined Targets
If the current trading range is small, lack of economic news and limited upside potential, I tend to look to sell out of all my positions at one target. This target will be set using Fibonacci extensions, trendlines or next prominent high points (if I am long).
2. Scaling Out of positions
If the market is in a trend, and your intuition and experience tells you that there might be an extended price move in the direction of your trade, then I will set 3- 4 target points (dependent on the amount of lots you are trading), e.g. 4 mini lots with 4 targets. This means that I am selling a mini/micro/large lot, as the price tests each target. In effect, I am maximizing the trading opportunity as it continues to move in my favour.
3. Trailing Stop
This exit strategy according to my system, is based on the premise that you have entered a trade with an objective, of a potential start of a new trend, generally on a larger timeframe 2, 4, 8 hour timeframe. Once the price hits the target levels, I will not sell out of any positions, but trail my stop first to breakeven. This action prevents a loss on the trade, then the next step will be to trail the stop to the first target, as it hits my second target my top will move to the first target. This will continue until the price retraces and hits my stop order. During the life of the trade, no lots are sold out. I am trailing the full trade size and locking in profits as the market continues to increase (trade long).
The above is my view on a part of trading, regardless of your account size. This is by now means the whole strategy (I could be here for ages
)To your success.
Start with a demo first. a new trader should not have as a goal making profits, he must first of all think about protecting his account while earning a good experience. Profits comes with time, and a hard worker and patient trader will be rewarded sooner or later.
Small capital? How small?
I would not be a trader with a very small amount of capital. I do not know a single trader (in options and futures) who has not lost money in his/her trip from novice to successful trader. Losing money always drives confidence into the pits and when it is a large percent of your capital it will end your trading experience.
You should invest in a few ETF's in several markets. Follow their ebb and flow, perhaps rotate sectors at peaks and valleys. While you are doing this, find a broker with a paper money account. Work on learning a one strategy of trading. Trade this strategy only, and record results in a journal - percent winning trades as well as p/l data. Tweak the strategy until you like the resulsts. When you have completed 200 trades of this single strategy in paper money and the results meet your expectations of success, try a single trade with real money. Your results of the next 20 trades will mirror the results of the 200 - but only if you had the discipline to follow your rules and record the results
Trading is fun and profitable, but remember 90% of the people that trade options, fiutures and the like, lose money. These are not like stocks where the average guy makes what the market move is (8% per year for example), there is no net gain in options and futures - the entire market breaks even, there is no winner, none, zip, zilch, zero. Five poker players came to the game with $100, and after the game the 5 left with a net $100, but the average was no net winner. Same in options and futures. If you are not willing to spend the time to be better than average - you WILL lose money.
Drake
The very first thing you should do is analyze how your trading system/style will fit with your life. Do you want to make trading your job? A hobby for the weekends? A nightly thing when you come home from work? Figure that out first.
Second, focus on stocks, forex, or whatever you like for your timeframe. You must absolutely figure out a trading method that generates positive expectancy. Basically, you want to figure out a trading routine that, on average, you make money on every trade.
This means you should get charting software and do some backtests. I recommend Amibroker for beginners (because it's easy). Ninjatrader and Metatrader are good too, but more complex coding.
Good luck! Check the beginner's FAQs too.
Second, focus on stocks, forex, or whatever you like for your timeframe. You must absolutely figure out a trading method that generates positive expectancy. Basically, you want to figure out a trading routine that, on average, you make money on every trade.
This means you should get charting software and do some backtests. I recommend Amibroker for beginners (because it's easy). Ninjatrader and Metatrader are good too, but more complex coding.
Good luck! Check the beginner's FAQs too.
Don't be a trapped trader
Figure out where the market is supposed to go, then wait for entry signals in the opposite direction and use relatively small stops to catch some profit from those contrary moves. The reason 95% of retail traders lose at Forex is because they are so predictable... It's my guess that moving your stoploss (running away from the stop hunters - which is not your local provider, by the way) is the main account killer. Try to put this information together and you stand a chance of making money in Forex.
Good luck!
Figure out where the market is supposed to go, then wait for entry signals in the opposite direction and use relatively small stops to catch some profit from those contrary moves. The reason 95% of retail traders lose at Forex is because they are so predictable... It's my guess that moving your stoploss (running away from the stop hunters - which is not your local provider, by the way) is the main account killer. Try to put this information together and you stand a chance of making money in Forex.
Good luck!
I started from small capital an I'm still trading. Here is what worked for me.
#1) back test over 10 years - preferably 20 years (include broker fees in back testing)
#2) have 4 times the capital of the greatest cumulative loss
#3) keep working on you strategy until you have a 5.0 profit factor
#4) make sure you are happy taking ALL losses and only 1/4-1/2 of the profit trades
#5) trade your program
#1) back test over 10 years - preferably 20 years (include broker fees in back testing)
#2) have 4 times the capital of the greatest cumulative loss
#3) keep working on you strategy until you have a 5.0 profit factor
#4) make sure you are happy taking ALL losses and only 1/4-1/2 of the profit trades
#5) trade your program