Best trading strategy if you’re using less capital or have a small trading account

Swing trading

It is very common nowadays (due to the internet) many people are opting to learn about stock markets and the profits and the losses it can give. While most of the new traders lose money instead of booking some profits, if you’re a person who’s just starting out and trying your hands to make some quick bucks without ‘risking it all’, then read on!

Tips

The sections in this articles will help you strategize and build up your trading plan so that you can last in the market for a long time. Let’s start with tip number 1.

Think of trading as a survival game

If you could look at the bigger picture, trading is just a survival game in which you participate with the hopes of being at the top and defeating all the obstacles that come your way. The only difference is instead of your life, it is your money which is at risk.

Hence, your primary objective should be to avoid losing your initial capital. What this means is that let’s say you start out with a $100. You trade for a month and now you have 3X of the initial amount. This is $300. Let’s assume that the next month you lose all your profits and even some portion of your initial amount. Finally, at the end of the month, you’re left with 50$ in hand loosing out 50% of the amount you initially invested.

Do not Day Trade

Let’s be honest. You cannot be an overnight millionare with just 100$ invested. The reality is that trading is a process rather a one time flick. You earn some and lose sum and at the end of the day, all you should care about is about the losses rather than the profits.

The reason to not day trade is because of the fluctuations in the price (volatality) which makes every 9 out of 10 investor/trader loose their money. Instead, you should focus on Swing trading.

Swing Trading

Swing trading involves you taking up a position and holding it for a day/week or a month. What this gives you, is an exposure to the market. With swing trading you could have been invested while at the same time testing out your strategies and predicting the price. It also makes you feel responsible and aware of the amount you’ve invested in buying/shorting that stock. Because its only when you’re in the game, you start to notice all the rules and the tips and tricks.

Swing trading also gives you the benefit of spending some time to study the market. Day trader requires more concentration on the specific time frame and requires a trader to be aware of the trend the specifically the price action. With swing trading you could look up the daily chart, analyse the trend and make some notes on your strategies and predict where the price action would go next.

Not to forget, the point is to stay in the game for as long as you can and learn about how the market moves.

Pick up an initial strategy

Now that you’ve decided to do swing trading, it is time for picking up a strategy to take your positions. Remember to not invest in the market randomly. That is a few novice traders buy a script when they see the script’s price falling. This is a very common mistake and can result in huge losses as it can be that the stock is already in a downtrend.

We recommend using this strategy to start off with and later build up on this to increase the accuracy and book profits and avoid losses.

Conclusion

We decided to write a dedicated blog post on this as we figured that a lot of users who’re registered with us are beginners. And as trading is a never ending ‘learning’ journey, we hope to have provided value to professional traders as well through this article.


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