Trading a New Account

By | June 30, 2018 4:26 pm

Trading a new account is something that all traders have to do at some point (usually at the beginning of their trading career), so it is important to know how to trade a new account correctly, otherwise the new account may quickly become a closed account.

Professional traders are created by learning about trading, and then by experience using the information that they have learned.Learning trading can be a relatively straight forward process, but it usually is not, because there is a vast amount of incorrect or misleading information available on the subject of trading. Sometimes new traders mistakenly believe some of the incorrect information, in which case they may never recover, and may never become a professional trader. Sometimes new traders realize which is the good information, and which should be avoided, and eventually become professional traders, but this can take months or even years.

The Psychology of a New Account

A new trading account is difficult to trade, Its Like Driving Your New Luxury Car for First time as you do not want to get Scratch on your car. Similarly in New Trading account has no buffer between being profitable and unprofitable, You do not want to start with a Loss and reduce your trading capital.

This places huge psychological pressure on the trader to make the first trade a profitable trade, so as to provide the aforementioned buffer against the account being unprofitable. This psychological pressure can cause a variety of responses depending upon the trader, but the most likely are either incorrect trading or lack of trading.

Incorrect trading is where the trader makes mistakes that they would not normally make, because they have modified their trading technique in order to maximize the potential for the first trade being profitable (so they think). In actuality, the trader has most likely modified their trading technique in a manner that minimises the potential for the first trade to be profitable, and therefore they make the unprofitable trade that they were trying to avoid. For example, a trader might decrease the size of the trade’s stop loss thinking that a smaller stop loss is lower risk, without realizing that the smaller stop loss is actually higher risk because the stop loss is now placed incorrectly, and is more likely to be reached.

Lack of trading is where the trader does not make any trades for the new account, because the fear of making an unprofitable trade prevents them from making a trade at all. Note that this is not always the reason for lack of trading of a new account, as there are also valid reasons, such as waiting for a suitable trade.

Trading a New Account Correctly

A new trading account should be traded in exactly the same manner as an account that is well in profit, because it is correct trading that will make the new account a profitable account. The trader should trade according to their trading technique without any modifications, and the risk management ratios and formulae should be used and adhered to correctly.

Trading Basics

The first information that new traders should learn are the basics of trading. A good understanding of the basics of trading will provide the foundation that will support a trader’s entire trading career, and will enable efficient learning of trading’s more advanced topics. The basics of trading include all of the factual information about trading such as, what trading actually is, the markets that can be traded, what contract specifications are, how buying and selling orders are placed, etc.

More Importance should be given to Psychological aspect of trading.


Trading Systems and Techniques

Learning a trading system or a trading technique is where learning trading becomes complicated, because what needs to be learned is no longer factual information, but rather an ability which can only be gained through experience.

The best method of learning a trading technique is to find a professional trader to teach you their trading technique. The best trading instruction will be from a professional trader that offers trading instruction as an adjunct to their trading, because their primary source of income will be their trading rather than the instruction (i.e. be very wary of so called professional traders whose primary source of income is providing trading instruction).

If you are unable to find, or cannot afford, a professional trader to teach you their trading technique, then it is possible to learn a trading technique without any form of instruction, but the amount of time that is required will increase substantially (e.g. instead of a couple of weeks of instruction, it could take months or even years of trial and error), and the likelihood of success will decrease substantially.

Starting Learning Trading

So, to conclude  the method of learning trading that is most likely to result in a successful trading career, is to learn the basics of trading , then to find a professional trader to teach you their discretionary trading style and technique, and master them.


One thought on “Trading a New Account

  1. Basavaraj H

    Sir mind boggling article,inspiring n educative ,a new trader would like to go through market indicators particularly the ones that take into account volume into account ,plz through light on this aspect ,thank you


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