The majority of traders entering the Forex trading world cannot afford the luxury of beginning their journey with a big forex account. Nevertheless, it doesn‘t mean that traders with a small Forex account can’t make big turnovers. It is absolutely possible. In the following paragraphs, youll discover the 10 most practical trading tips that can help you grow your small Forex account into a six-figure account or more.

1. Be familiar with Broker Commissions & Trading Costs.

Trading costs are another very important factor that beginner traders should understand while trading with a small Forex account. Its because Forex trading costs will have a significant impact on your potential profit and negatively impact your trading portfolio if you fail to consider them. Spreads, commissions, and swaps are the three most common forex trading costs encountered by beginners.

Spreads are implied costs for trades. The spread is an important factor in forex trading, which is basically the difference between the bid and ask prices of a currency pair. It is always better to have a low spread while you trade with a small Forex account since marginally higher spreads will cost you more money as trade volume increases.

A Forex commission is based on the fact that trading mediators compensate themselves for their services provided to ECN account traders. However, this strategy is less popular with retail Forex traders. Commissions are deducted from an accounts equity and not from its Balance. The payment of these typical high commissions seems to help traders avoid abnormally wide spreads, requotes, and slippage over the long run.

A swap fee or rollover fee is an overnight interest rate that is added or deducted from a position held overnight. The cost will apply only if the position does not close before the next trading day. When trading with a small Forex account, understanding how Forex swaps work is essential since it will affect your potential profits.

2. Identify the Best & Worst Time to trade Forex.

Having an understanding of the different Forex trading sessions is crucial for a small Forex account owner. Forex trading is not driven by single currency exchange. There are several global currency exchanges and brokers participating in this network. Each participating country has its own set of Forex trading sessions. The four major forex trading sessions are the Sydney session, the Tokyo session, the London session, and the New York session.

If more than one of the four markets is open simultaneously, currency fluctuations will be greater since there will be more trading activity. It is always best to trade during the overlap between U.S. and London trading hours (8 a.m. to noon EST) because the volume is always high. The overlap between Sydney and Tokyo trading sessions presents excellent opportunities, although it is less volatile than the overlap between U.S. and London markets (2 a.m. — 4 a.m.).

In general, Monday is the slowest day of the week in terms of trading activity. As market participants return from their 48-hour hiatus, it‘s hard to predict how the market will behave. A Friday is the opposite of a Monday. Liquidity tends to be lower during the final 24 hours of a trading week. Historically, technical analysis works best in highly liquid markets. Additionally, you prefer not to take on new risks before the weekend. Because you never know which side you’ll be on the following week.

3. Make sure you have a clear entry and exit strategy.

The most important thing a beginner trader should focus on, especially when trading with a small Forex account, is developing an effective entry and exit strategy. As you plan a Forex trade, it‘s natural to be concerned about what if everything doesn’t go according to plan？ Dont worry! By creating a tight exit and entry strategy, you can prevent your small Forex account from going bankrupt.

There are several factors to consider when developing an entry and exit strategy for Forex trading. You need to decide what kind of trader you are since your trades will be based on your time horizon and potential risks. When you‘re a day trader or a short-term trader, you’ll need to monitor your trades closely and identify your entry and exit points. In contrast, if you are trading long-term positions, you should be more patient, since the gains will be greater.

In short-term trading, a lower risk ratio is more favourable because a short-term trader makes money by making more winning trades. As long-term investors seek to maximize profits for each position, they may prefer a higher risk ratio. Also, you may need to keep your strategies simple and follow trends; do not trade against the market. Exiting the market is more important than entering, as your profits are determined by how you exit the market. Make sure you test your entry and exit strategies, and always use a stop-loss order.

4. Avoid trading every market trend and news update.

In spite of the fact that economic data affect exchange rates, and markets experience significant volatility following the release of important news, trading news releases whose outcome and market reaction cannot be predicted are risky; especially if you own a small Forex account considering your lack of experience. Traders who are unaccustomed to increased volatility are advised to stay on the sidelines. It is not a good idea to put your hard-earned capital at risk.

The difference between the noise and the trend must be well understood by beginners with a small Forex account when starting out. Just because the market is fluctuating, does not mean they should trade it. Most volatility you see every day is actually just a trap waiting to catch unprepared traders. When trades go in a traders favor, it is common for them to mistake luck for skill. Beginners often set themselves up for huge losses in these situations without even realizing it. A few winners may be found by luck, but their chances of continuing success are very small.

It is essential to use technical analysis when trading Forex as it can help identify the overall price trend, as well as optimal entry and exit points. The goal of technical analysis is to predict future price movements with greater accuracy by analyzing past market data such as prices, volumes, and trends. Taking an online Forex course made by trading experts can help you improve your small Forex accounts performance as well as its growth.

5. Establish a Risk-Reward Ratio before entering a position.

Whenever you enter a trade Forex, you should always consider the potential trading losses. Think about the potential rewards only after that. As a result, you will be more realistic and won‘t be carried away by too much optimism, and you won’t overlook the real risks.

Staying in the market for a long time is possible only if you keep your losses low, minimizing the impact of potential risks. Identifying the amount of risk, you will take on each trade is the first step. Its always a good idea to never risk more than you can afford to lose. Assume a worst-case scenario where your money is lost or squandered in trading for a long time, are you okay with that？

A small Forex account owner should not lose more than 1–2% of their capital in a single trade. This step cannot be underestimated. A proper risk-to-reward ratio is 1:2 or 1:3, which means that profit potential should be at least double or triple the potential loss.

6. Be careful not to overleverage your Forex trades.

No one can deny the fact that Forex leverage, or trading with borrowed funds, is one of the attractive features of the forex market. Trading with leverage will only take a small deposit as an initial margin to initiate a trade. In simple terms, with a leverage ratio of 1:100, you can trade 100 times the value in your account. However, choosing the right Forex leverage is equally important, since its a double-edged sword that can adversely affect your profitability.

The danger of excessive leverage should never be underestimated, no matter how appealing it may seem. The majority of new traders with a small Forex account often fall prey to the misconception that higher leverage will produce significant results. Therefore, when a position fails, they are forced to bear higher losses, resulting in a lower margin for future trade, or even losing their accounts.

Beginners should only use the amount of leverage they are comfortable with. If you dont like taking risks and are conservative, 1:10 or 1:50 might be the right choice. Leverage levels play an important role in the growth of your small Forex account and contribute to your financial stability.

7. Identify the best currencies that maximize your profits.

Despite the fact that foreign exchange traders have access to more than 200 different currencies, not all of them are profitable. The best way to grow your small Forex account is to determine which currency pair is best to trade.

Getting started with the major currency pairs is the best course of action when you are new to the Forex market. Forex traders seek out major currency pairs because they represent stable economies around the world and offer low spreads, which accurately reflect market prices. By selecting the major currency pairs, you will be able to access plenty of expert advice and data to simplify your trading process. As you gain experience, you can trade with other pairs.

Beginners may suffer substantial losses when they encounter unexpected pairings. We have compiled a list of the best currency pairs to trade in 2022 to help you learn Forex trading. Its worth checking out.

8. The Importance of Technical & Fundamental analysis.

The significance of both technical and fundamental analysis cannot be underestimated in Forex trading. Both technical and fundamental analysis is used to support trading decisions, market trends, and historical market data, including when to enter and exit trades, respectively.

Technical analysis is the process of analyzing past market data, such as prices, volumes, and trends, in order to make predictions about future price movements. Data analysis helps analysts predict what the market will do in the future. It is important for Forex traders to be able to recognize price-based indicators, volume-based indicators, and moving averages in order to make an informed decision.

The fundamental analysis differs from technical analysis in that it uses economic data and news articles to identify trends instead of charts. The fundamental analysis of a currency involves analyzing economic, social, and political forces that may affect its price. In spite of the fact that some Forex traders prefer one type of analysis over the other depending on their trading style and objectives, the majority use a combination of both types of analysis to maximize their profits.

9. Make the most of the Forex Bonus to maximize your earnings.

Finding a broker with a solid Forex bonus scheme as well as a strong market reputation is the best way to improve your earnings with a small Forex account. A major advantage of trading with a Forex bonus is that it increases your trading equity as well as your investment capital.

Lets say you deposit $100 in your trading account and receive a 50% bonus, meaning that $50 is added to your account. Now, the total balance of your account is $150. It is possible to hold more trades and swap larger lots by maximizing your deposit amount.

In order to attract new clients and reward existing ones, Forex brokers offer a variety of Forex bonuses. You can receive some of these bonuses when you open a forex account (Welcome Bonus), while others will be granted after you have completed a trade, and others will be deposited into your account after a deposit (Deposit Bonus). These bonuses come in many forms, but one thing they all have in common is that theyre all beneficial!

10. Role of a Reliable Forex Trading Platform.

Sometimes, despite your winning strategy, you won‘t succeed if you don’t know how to use a trading platform and place orders properly, or if you choose a fraudulent trading platform. It is crucial to get to know your trading platform since it is the only way to avoid making errors such as placing orders wrong.

The best forex broker for you is one who gives you full control over your personal area and direct access to trading platforms. Brokerages that do not offer direct access to funds or trading histories or are not MT4 or MT5 licensed should be avoided. If you are going to execute a market order or a pending order, be sure you understand the buttons. Practising on a Demo account can help you become familiar with a trading platform quickly.

The MT4 platform offered by AximTrade makes getting started with Forex trading relatively easy. Read the AximTrade review for the information on how regulated brokers can benefit your trading.

Original Article: 10 Most Effective Ways To Grow Your Small Forex Account

Disclaimer: This post is from Aximdaily and it is considered a marketing publication and does not constitute investment advice or research. Its content represents the general views of our editors and does not consider individual readers personal circumstances, investment experience, or current financial situation.