How Much Money Should I start Trading With?
Knowing the amount to start trading with can be one of the toughest hurdles that most new traders face when they first start trading. In our opinion you should only start with a sum of money you are willing to lose. Now of course that would-be worst-case scenario; but by having this mindset you will focus more on capital retention rather than speculated capital investment and this is a crucial point which will define your success or failure.
Too often through social media you see traders posting screenshots of their accounts with large sums of investment capital and earning 20k-30k returns. Now this does happen, but for a beginner this just isn’t realistic. You should start with maybe £100 – £200; focus on building your confidence and knowledge rather than making mass amounts of returns to start. Use this small investment to get your emotions and trading strategy in place before you begin increasing your portfolio.
Of course, the bigger the investment the bigger the profit, but you also need to remember the bigger the investment, the bigger the loss; this is often the reason as to why traders quit so early on; because they invest all their savings too prematurely and take a large loss. The emotional dependency they had on that money triggers the emotions of anger, frustration and sadness in turn causing them to quit and forever think that trading is a false dream. When in truth they went against common sense and caused their own failure.
Don’t Be That Person.
It is also important to remember that before you even reach the point of beginning to invest your own capital into trading; you need to reflect and see if you have put in all the work behind the scenes. One of the key steps is have you practiced on a demo account and not just for one day but a couple of weeks. This takes a lot of patience but by practicing your analysis and ensuring you are in the green more than the red you will find the transition to a live account to be that much easier and in turn will increase your chances of trading more successfully.
As always everything mentioned is our opinion, but we have come to these conclusions from our own failures and mistakes. We hope this helps.