The interest rates banks are offering on savings are at a historical low. They are even lower than the inflation rate. Low interest rates and taxes on capital make it simply impossible to make any money with your savings account. Luckily, it’s also possible to trade using small amounts. It doesn’t matter if you have 50, 100 or 1000 pounds. Trading is always possible!
How can you trade with a small amount of money?
You can trade with a small amount using an online broker. Most of the orders are placed online, which reduces administrative fees. This also makes it possible for people to profit from small exchange differences. Brokers love to attract as many traders as they possibly can because they make money on every trader on their platform.
It’s even possible to try out trading completely free with a bonus of up to 25 pounds! Brokers try to attract as many new people as they possibly can because every client brings in money for them. You can profit from their strategy!
The biggest benefits of modern, online trading:
- You hardly pay any fees: on a EUR/USD trade you only pay a few cents!
- By using leverage you can yield a huge return with just a small amount of capital.
- By using a free bonus you can try out trading completely risk free.
- You can also short, which means you can make money when a market is in decline.
- Thanks to the analysis tools, you can easily predict what the price will do.
Important: use a strategy
It’s important to trade following a strategy. People usually fail as starting traders because they A) have no strategy or B) don’t follow their strategy. Always think about what you are going to do and why. By testing your strategy with small amounts, you can easily find out if a strategy is suitable for larger amounts.
You can then also find out if you can build your portfolio and create a nice source of income by trading. When choosing a strategy, you can put the emphasis on news or on chart analysis. By keeping a close eye on the news, you can choose to go short on a certain stock. A profit precaution is a very good indicator that a company isn’t doing too well. The demand for the stock will drop, meaning the price of that particular stock will go down.
More and more people are using chart analysis. Within each chart you can spot regular and recurring patterns. By studying these patterns, you can place orders that automatically buy at important levels. Make sure that when you trade you make more money than you would lose at the stop loss level.
When to switch from a small amount to a large amount?
By trading with a small amount you learn how trading feels using real money. The principle of trading is exactly the same using a large amount, but it will certainly feel different. Therefore it’s important to start out with small amounts and build up from there. You will get the hang of it slowly, but surely. And once you’re comfortable trading with small amounts, you can start trading with larger amounts.