Why trading with small funds isn't advisable
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Recently I've been approached by quite a number of friends, who are eager to start trading, the first thing they tell me is they are tired of living poor financially and they would do anything to get out of such state.
I do see the enthusiasm in them and I'm willing to put them through first I would tell them what must expert won't be probably telling them trading/crypto space isn't a get rich quick stuff I've been in the system for year's, I've learned from several mistakes and I would as well went them to avoid such mistakes.
I do understand their feeling where am from it's not easy to find a secure job and with advanced technology a lot have switched to making their daily income from the Internet.
Rules 🚷
I tried as much to keep it simple by giving them this simple rules.
Don't expect high as a beginner; it is very obvious as I've observed the newbies that want to learn from me are not actually after the process but after the money all they are interested in how they would start earning high.
Control emotions; it's quite tempting when one is offered a plate of gold he would not bother to ask how such gold could be mined either will they bothered about the process of refining gold, fear, greedy settles in and what these beginners are after is making the money and not considering what is driving them they stop thinking with their brain and let their emotions think for them if one enters trading with such attitude then they likely to burn all their initial asset.
Learn the process; trading requires guidance and most importantly practice even experts make mistakes learning market analysis, the fundamental, technical, and psychological analysis with proper risk management will do well for such beginners.
You need money to get money; This is another major problem these beginners are faced with, they are eager to start trading and had little finance at their disposal which is not advisable for trading using spare capital to trade is very important as anything is bound to happen in the market due to market high volatility.
Finally why you should not trade with small fund; intraday trading can be very difficult as one is struggling to make a profit from trend high and low swing of market movement, trading with small fund one is at high risk of losing all his fund in seconds market volatility are an uncertain movement that can happen anytime.
I just observed these newbies tend to choose shortcuts instead of following the rules to learn before applying, they would prefer to trade without rules which is in form of gambling their money, and come back with I couldn't bear my financial state so I choose to trade without following those rules.
Trading has never been an easy strategy as the risk involved is very high if one would be starting out going through the process of learning and mastering trading strategy is very important and necessary before starting with real finance also starting with a small amount could be very risky except you understand how to apply proper risk management such as not using more than 10% of your trading fund in any position.
Taking time to learn is very important and good for one's financial state.
Excellent article, my friend. I value this kind of information very much. I tend to trade very small amounts, and well, yes6, sometimes what you say has happened to me, funds vanish in an unexpected crash.
If I add to that my inexperience and the fact that I have not yet started to study and learn how to trade, well, you can imagine how I get before, during and after any loss or gain. I need to take the advice you have given us in this post.
Thanks for your valuable contribution.
Hi im much glad to hear you find this article very interesting do appreciate your feedback thanks for stopping by.
Very good article friend @ mccoy02, certainly they are words that not many are prepared to hear but they are all very true, they exemplify in a quite clear and precise way the risks of operating with small funds, as well as the inconveniences of assuming trading from a perspective erroneous.
I am one of those who thinks that within the cryptographic business one of the best tools that we must handle is knowledge, the more we know the environment and we know how it works, the easier and safer it makes us to invest, the other point is that as you say, we must have a good management of our emotions, respecting the fundamental bases of this type of business and not being manipulated, but having a consistent investment strategy that respects the rules of the game.
Thank you very much for sharing such valuable information, greetings.
Hi thanks very much for the feedback its very important for anyone trying to venture into crypto trading to have the basic knowledge it will help a lot fund is also a great tool for managing risk trading with small fund can be very risky.
When I saw trading with small funds initially, I thought it was in general terms until I read through, your article is centered on crypto currency. From your article I assimilated three key points from the five you mentioned. You need money to make money; you need learn the process before dabbling into it; and controlling emotions. Those are salient points. Thanks for sharing.
Thanks for the feedback sure one need to be financially intelligent to make money with money.
The rules you give to your friends are very good, but where you should emphasize the most is in two very important points, one, learn the process very well, that means that they must know very well how the traiding is, and two, I think that knowing how to control emotions is also important.
Thanks for the tip learning the process is very important and importantly controlling emotions.