How to Trade Successfully with Small Trading Account

Every trader who starts trading wants to trade  big accounts but very few of us actually get to do this. Most traders are stuck with trading relatively small accounts not more than 5 lakhs  and most of them go bust. Trading a small account requires very strict risk management and money management with strong mental strength  because there is no buffer against mistakes or any unexpected losses. In Recent Memory 24 June was the day where many traders trading small account went bust. Nifty opened gap of 300 points and if you have small account if a trading account only covers its required margin for 1 lot of NF @50000, and it takes a 22000 loss, the account will become untradeable until additional money is deposited and most of traders will throw towel.

Trading a Small Account

Trading a small (or under capitalized) account is much more difficult than trading a large account. Large accounts are buffered against mistakes, unexpected losing streaks, and sometimes even bad traders, but small accounts have no such buffer.
In addition, trading a small account has psychological issues that make it even harder to trade the account well. For example, when a trader knows that they can only afford a single losing trade before their account becomes untradeable (because it will know longer cover its required margin), the pressure to make a profitable trade is enormous. If the trader handles this pressure well, this might not be a problem. However, even the best traders have losing trades, and there is nothing that can be done to avoid losing trades, so this is not something that the trader has any control over, which adds to the psychological stress.


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