During my trading career, I faced a crucial decision: when was the right time to increase my trading capital? I discovered four essential guidelines that helped me determine the best moment to boost my account. In this article, I’ll share these tips with you to ensure you make the right decision at the right time.
1. Master Your Trading Strategy
Before increasing your trading capital, make sure you have mastered your trading strategy. I explored various strategies and chose one that suited my needs. It’s crucial to understand your strategy’s entry and exit points and know when it works best.
When I finally found success with my chosen strategy, I knew it was time to consider raising my trading capital. If you haven’t mastered your strategy, don’t increase your capital, or you might risk losing more money than you can afford.
2. Trade for a Minimum of Six Months
I learned that it’s essential to trade for at least six months at the same account size level before increasing your trading capital. Trading for a short period doesn’t provide enough time to evaluate your strategy thoroughly. I began with a demo account, trading for six months, which gave me the confidence to manage larger amounts and control my emotions.
3. Stick to Your Money Management Plan
Before raising your trading capital, ensure you’ve consistently followed your money management plan. I set a rule to take at least twice my dollar risk as profit. For example, if I risked losing $20 per trade, my take profit was $40. If you can stick to your money management plan, you’ll be better prepared to scale up your account.
4. Be Consistently Profitable
Before increasing your trading capital, evaluate your trades to ensure you’ve been consistently profitable. If you’ve made steady profits over six months, it’s a good sign you’re ready to boost your capital. If not, review your strategy and make necessary improvements before taking the leap.
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