How to Properly Fund a Trading Account?

Hello, forex trader friends!

Today we will talk about a not-so-obvious aspect of trading: funding your account. Yes, yes, you heard right. Money management is not only position size management, but also deposits and withdrawals from the account. In this note I will try to clarify how to put money into your account correctly: whether it is worth depositing a lot at once, how to step out of your comfort zone, and a small secret that will save you a ton of nerves and money.

A typical beginner's mistake in forex. He opens an account, throws 100 dollars in there, on the very first day, usually by accident, earns 20-30 dollars, and a calculator switches on in his head. "So then, I made 20 dollars in a day, in a week I will make 100, and in a month 400. And what if I put in 1000$? Then it will be 4000 a month. And what if I sell grandma's apartment (no one lives in it anyway)......... Hey-ho, Abramovich! Wait for me!!!!!!! Soon we'll be comparing account sizes!!"

Don't do it. Even if you have those very 100500 money units that are yours, that you are going to invest in trading, you do not need to put them all into the account right away. Even if everything is fine with you, the strategy is holy-grail level, your nerves are made of steel, and you have 24 free hours a day. You will understand why now.

There is such a concept as the "Comfort Zone." It is your familiar way of behavior, life, rest, and so on. Any deviation is a step out of this zone. If you jump with a parachute, having never done it before, or go up to a pretty girl and invite her for a cup of coffee, although you usually do not do that, all of that will be stepping out of your comfort zone.

If you are familiar with personal growth training, then you know that they usually practice a sharp exit from the comfort zone there. For example, if it is a time management training, then you suddenly start living by a schedule, counting every minute, resting only at certain times, and so on.

And if it is a confidence-building training, they may give you the task of snatching a mobile phone from a passerby (then returning it and apologizing).

As soon as the training ends, 90% of participants return to their usual rhythm of life. 10% continue to use some techniques, for example they make to-do lists, but in general no one behaves the way they did in the training. Why?

Because the step out of the comfort zone was too abrupt. And, like on a spring, it snapped you back.

How does this relate to trading? Very directly. As soon as you start trading with an amount that is unusual for you, you step too far and too sharply out of your comfort zone, and right away you get hit in the forehead with a rake.

It is about moral unreadiness, lack of experience in handling large sums. And ... in the Universe) Call it quantum physics, "The Secret," whatever you like. But as soon as you start earning an amount that is too different from your previous income, you immediately get smacked by the universe. Tested by many, including me.

Therefore, the growth of income (and the deposit) should be gradual.

So. even if everything is super for you, you have spare money, luck is on your side, and so on, there is no need to deposit the whole amount at once. Gradually, by about 10-20 percent per month, increase the size of the deposit. In the course of trading, many nuances and difficulties that you did not even suspect will reveal themselves, and you will thank yourself more than once for following this principle. The step out of the comfort zone in trading lot size and income will be gradual, and it will contribute to your growth as a trader.

The next technique will be useful for those who trade several strategies and/or forex advisors.

Suppose you trade the same All-In once a week, try to scalp on M1, and also have a night scalper advisor and some robot downloaded from the market in your terminal. All these systems are on separate live accounts, with 100$ in each account.

You have profit on the All-In strategy, your scalping goes so-so, the night scalper gives a small but steady increase, and the advisor from the market is mercilessly draining the account (like all EAs in the MT4/5 market).

Question: on which account should you increase the deposit? Naturally, on the accounts that are growing. Is All-In in profit? Increase that account. Gradually, there is no need to deposit everything you have. Is the night scalper in profit? Increase the deposit there too. Is your scalping not working out? Then there is no need to put money there.

The next point is important for your moral state, though perhaps not the most effective from the point of view of deposit growth. If there was profit in the past month, increase the deposit. If there was no profit, do not increase it.

I understand perfectly well that this is not entirely correct, because if there is a drawdown this month, you will increase the deposit and will be able to compensate the losses faster with the same lot... But! For moral stability, profit is important to you. And only then, the deposit increase. Otherwise you will get smacked in the forehead by the Universe ))

Let me be a little bit "Captain Obvious." Pay attention to the broker's and payment systems' fees when depositing and withdrawing funds. They are usually listed on the broker's website, sometimes even on a separate page. Because sometimes those very fees are unreasonable and can even "eat up" your entire monthly profit.

Respectfully, Pavel Vlasov TradeLikeaPro.ru