Keeping Perspective with a Small Account:  3 Problems and How to Solve Them

Keeping things in perspective will make working with a small account easier.

Binary options trading has many benefits to offer traders, but one of them is scalability.  You can literally start out investing in binary options with a shoestring budget.  With companies advertising accounts that you can get started with as little as $100, this particular type of trading draws in a lot of traders who do not have a lot of financial resources.  The entry barriers are higher for other types of trading like the stock market, which charges expensive fees.

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There are dangers to trading with a small account, though.  Lots of traders will simply blow it.  Why?  The main reason is impatience—and a feeling that all is vanity.  It is not easy to have an account with just $100 in it, and continuously invest only 5% of that amount.  Five percent of $100 is … $5.00 (and that is a liberal investment percentage).  Do you honestly think you could invest $5.00 on your trades but treat each one like it is of the utmost importance?  When you put a ton of work into something and get $5.00 back, it can feel like a wasted investment of your time and energy.

This tempts traders in this situation to do one of several things.  Either they start investing larger amounts of money, hoping they will get lucky and double their account size overnight, or they start taking every trade setup they see (instead of just the best ones).  Or they simply rush through the steps of learning to trade, thinking they can just cut straight to the chase and start trading real money without testing first—because they are in a hurry and feel like they need to get started right now or they are never going to get anywhere.  These are all bad decisions which will usually lead to a trader blowing his or her bankroll overnight. Do not skip a demo trade – here’s why

So what do you do about your small account?

Problem #1:  My investment size is too small.

If you cannot deal with investing $5, you really only have one alternative, and that is to open a larger account.  It does not have to be huge, though.  Binary options is a business where you should theoretically be earning money along an exponential curve.  It is not going to be a perfect one, but it is not like a salaried position where you are going to earn the same amount of money each year and never anymore than that.  If you have some patience and you are willing to go slow in the beginning, your investments will compound and eventually things will speed up.

Don’t panic if you can only bet the minimums! Great Binary Options Brokers offer minimum trades – find out here

Consider an account that is $500 or $1,000.  With either of those account sizes, you could be trading closer to $25 or $50 respectively on your first trades.  As your account grows, the percentage remains the same, but the amount increases.  That might sound like a lot of money right now, if you think you can only swing $100, but you probably have a lot of work testing ahead of you.  That gives you some time to gather financial resources.  Still easier said than done, but do what you can to save money.  Otherwise … go ahead and get started, but be prepared to be very, very patient.  You will feel like you are involved in a long testing phase, but you will still slowly build up money if you trade well. These steps were created to provide you with an accountability list. Check ’em out

Problem #2:  There are not enough trades.

If you are only making $50 on your winning trades, you still are going to be moving along ridiculously slowly if you only have a couple of good trades a month.  You need to find a way to trade more often.  One solution is to choose faster trades.  That solution is not for everyone, however, and most people will achieve more profitable results with longer trades.  That still leaves you with another alternative though, which is to watch more than one asset.  With binary trading you have access to dozens of assets.  Some brokers offer over 100!  That means plenty of trading opportunities, even if you are picky about your entries and you are not doing short little 60-second trades.

Problem #3:  I am impatient to get started.

There is not much you can do about this problem except learn to cultivate some discipline.  You cannot rush through the learning process, thinking that will somehow cut off time from your race to riches.  It will actually add time to that quest, and probably a great deal of it.  There are no shortcuts in this business.  You have to have a great trading method, a sound plan, and the discipline to follow through.  That does take time.  Look at it this way.  If you actually can build a business or get rich trading binary options, is tacking on one year to really learn this stuff going to deprive you of your riches later down the line?  Probably not.  But not taking the time to learn the art of trading is going to make it impossible to ever get rich.  And look at the bright side—by the time you solve this problem and learn to trade like a pro, you may have enough money to open a larger account!

Take your time to do thorough research – even look for common mistakes! Find out if you are making any right now.

Photo credits: Wallstreet