3 Major Disadvantages Of Trading Forex On A Small Account

Many people tend to believe that defense is the best offense, and nowhere is this belief more evident than in Forex's markets. Traders often believe that limiting their trades monetarily will also inadvertently help minimize losses. But that's not quite the case. Forex trading, being the volatile market that it is, will bring losses to trades no matter how small! 

 

Additionally, the fact is that not all risks are loss-evoking. Some risks when taken right can bring in stellar profits. This is why risk management shouldn't be confused with minimizing trade potential.
 

Here are 3 disadvantages of trading Forex on a small account:
 

Disadvantages of Small Forex Trading Account

1) Minimal Profits: Small accounts mean small profits, and as a Forex trader, you have to go beyond the point of minimal returns and breakevens. The reason several Forex trading professionals start off with hefty investments is because small trades just don't cut it when it comes to profits. There's an underlying threshold that limits small accounts from crossing a certain level of profits. While this might not bother you early on, down the line, you'll need bigger returns.
 

2) Lack of Money For Reinvestment: Reinvesting is something every Forex trader has to do in the long run. Even if you have a tremendous amount of trading capital, you have to come to terms with the fact that a lot of it will be lost to risky trades, hence the need for reinvesting a portion of the profits earned. Trading small will keep you from reinvesting, because you'll make minimal profits.
 

3) Standard Trade Rates: Be it small trades or big ones, you'll have to pay the same brokerage fee. And since you'll be making smaller wins on your account, paying the broker will seem expensive! These are unavoidable expenses, and you will have to go big or go home after a certain point.
 

The best way around your phobia of large trades is to get a good Forex demo account and practice on it till you're comfortable with bigger numbers. Once you have ample demo practice, facing big trades and taking big risks will be easier. All you need to succeed on currency markets' risky grounds is the backing of good Forex trading strategies and a reliable broker.
 

Reach out to WesternFX today and avail our world-class brokerage! On our Forex demo account, you'll be able to learn to your heart's content, before moving to live trades where we will guide you every step of the way. Backed by our experts, finding success in trades big and small will happen in no time. Call us today to know more!