WHAT DO YOU DO WITH A SMALL TRADING ACCOUNT?
A lot of traders get easily frustrated when they see big accounts make their potential 1 or even 5-year gains from just a single trade.
On your end, you’re making a paltry $20 or $50 from the same trade. It just doesn't feel like you’re making money.
This can make you feel Trading isn’t worth your time and effort, causing you to take bigger risks than usual; consequently, ruining your portfolio.
No doubt, position size matters a lot in trading. But if you run a small account, you must learn to focus less on profits.
I’ll teach you something you can do from today.
Ever heard of Compound Interest? It’s said to be the 8th wonder of the world.
In very simple terms, it means re-investing interest on a loan or deposit. Instead of taking off the interest from your initial capital, you simply reinvest it to keep earning for you.
In DeFi staking, a lot of protocols provide the auto-compound feature which radically increases the APY (annual percentage yield) for users.
In the case of Trading, you can manually reinvest your interest (profit) per successful trade. This can happen daily, weekly, monthly as your strategy permits.
Here’s how it works:
Let’s say you have a starter $500 trading account and can make 20% monthly; at the end of the first month, you’ll have $104.66 in profit and a total of $604.66.
In the second month, your profit will be $240.88, with a total portfolio of $740.88
By the 3rd month, you’d be $401.85 up in profit, with a portfolio size of $901.85.
By the end of one year, you must have grown the account to $6,613.13.
In just 3 years using the strategy, you’d have amassed yourself a whopping $658,417.13 - from just $500 starting capital.
See how juicy the numbers can get?
If you want to make it even better, you could add a specific amount (eg $100) to your portfolio at the end of every month from your external income sources.
Meanwhile, you can use this auto-compound calculator to check the figures for yourself.
Compounding your interest will require a lot of discipline, plus a good trading strategy that gives you an edge in the market to sustain 20% monthly.
There will be negative days, even months. Hence you must factor this into your expectations and try not to pressure yourself into achieving any targets that may psychologically destroy your portfolio.
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