3 Keys to Safely Achieve Profit with a Small Trading Capital

Safe trading with a small capital is not an easy task for traders. It requires knowledge and experience for a trader to reach this level. There are too many options for styles and methods to choose from, but among them all, there are surely key aspects.

It will be more promising if the trader is willing to learn some key aspects of each strategy, regardless of the chosen method. By learning the key aspects, safe trading with a small capital can be attempted so that the results will meet expectations.

So, what are the keys to safe trading even with a small capital?

#1. Trading Psychology

One definite step that traders must take to achieve safe trading with a small capital is to manage the psychological aspect. Maintaining emotional stability is a necessity in trading as it will affect each decision-making process in the market.

It is easier to say not to let emotions arise in trading, although in practice it will be very difficult. Even for experienced traders, it is actually difficult for them to do the same, except for those who are pros.

Specifically for traders who are just starting their trading activity, the difficulty will be more evident, although psychology is a key aspect for successful trading. Still in relation to the psychological aspect, the first thing that traders find difficult to accept is accepting defeat.

Regardless of what happens, traders should not react quickly. They should take a moment to pause to allow their emotions to subside. At some point, there will be a condition where the market is not in their favor and the trader ends up losing. It is important for traders to accept this as a natural part of trading and not let it affect their decision-making abilities. It is better to take a step back and reassess the situation rather than making impulsive decisions driven by emotions.

For example, when GBP shows an increase if observed from the 200-hour moving average data and the trader does not take this position because the fundamental analysis made states otherwise, namely showing a weakening until a certain period.

Often, the market will move according to its natural movement and the trader must accept it even if they have tried their best to win. That means, what the trader does is not always right so it will be very important to take a step back first and make an evaluation.

Even if the trade is of small value, the trader must still take a similar step. Safe trading with a small capital does indeed have advantages and disadvantages, but if the trader can maximize the advantages and minimize the disadvantages, the result will certainly be better.

In the GBP example, there will be temptation for the trader to take a short position against a higher level. But what the trader needs to think about is whether there has been a change in the technical aspect and the latest market sentiment situation?

For a while, trading may not go according to the trader's wishes. If this happens, it is best to take a break from the market and do other activities outside the market to keep the mind busy. The important point is not to be carried away by feelings or thoughts.

Never fall into the revenge trading trap. Practicing makes everything easier. This step can give the trader a strong foundation to improve trading psychology.

#2. Risk Management

This topic is often ignored when discussing safe trading with a small capital, although its effect is extremely determining. The problem that may arise is that risk management is not something "sexy" to talk about, unlike profits for example.

There are few experts who mention risk management, although this topic is an important aspect related to trading. Using a small capital gives traders more difficulty in controlling trading, and that is why management is absolutely necessary to improve trading results.

It is true that in the end risk management is something personal and depends on the trader's own wishes, but it still cannot be ignored. That is why there is no right or wrong approach to risk management.

Two things that should be of concern are caution and logic when deciding how much risk to take when trading. The standard approach commonly applied by traders is that trading risk should not exceed 20% of all accumulated capital.

This percentage can vary from one trader to another, depending on the risk profile, so it is very possible to change from one trade to another. But by adhering to a certain standard, it will allow the trader to be consistent and disciplined in terms of the risk taken.

At this point, stop-loss is used because it is considered the main point of risk management. Stop-loss can help traders prevent trading from being exposed to greater risk while also maintaining the percentage at no more than 20%. This is the initial risk management that traders should apply.

There is always a chance that traders will lose up to 60% of their capital in one trade if they are not careful in applying risk management. This is often the case when there is a change in the direction of movement in the forex market, causing the trade to be in the wrong position.

Again, there is no right or wrong in applying risk management, only ideals. One thing is certain, never let emotions take over trading and ruin the risk management that has been established. It is important to maintain discipline and stick to the risk management plan in order to maximize the chances of success.

#3. Time Management

Time can sometimes be a hindrance for traders, especially individual traders. Not all traders have the opportunity to allocate a lot of time to fully commit to trading. The next situation is that there are not many trades opened, and that means there is not much profit that can be capitalized.

Even more so with a small capital, difficulties will certainly increase because traders must be smart in taking advantage of opportunities so that capital is not wasted. However, safe trading with a small capital is still possible as long as the trader has an ideal time management.

Regardless of the difficulties that arise when trading with a small capital, choosing the right time can be a solution so that the potential for profit can be maximized. Following the right type of market at least can alleviate stress and the burden of piling up thoughts.

By knowing the right time, for example trading at 4 a.m., traders don't have to spend a lot of time in the market looking for opportunities. Understanding what is happening in the market means that traders will get quality trades so they don't have to open too many trades.

On the one hand, traders will not be able to see more opportunities because they are not always monitoring the market. Instead, traders are more able to capitalize on the opportunities that arise by using a consistent approach because they only focus on a few areas.

Time management is not only related to the time of opening positions, but also to the selection of the right time for successful trading with a small capital. It is not easy to reach this level, but with consistency and increasing experience, everything can be attempted.