[Day 4] 7 Things To Consider When Trading -- #4. Capital is the key

Today I will be covering an important topic from my 7 Things To Consider When Trading article. After you feel comfortable with the information you gathered from learning chart patterns and proper technical analysis then it will be time to trade. I first recommend using the Replay feature in TradingView so that you can pick a point from the past and "replay" the chart like its live. That way you can see if your TA would have been successful.

Once you see that your trades would have been successful then its time to make some real trades on the LIVE chart. This is where #4 of my article is relevant.

Table of Contents:

1. There is no shortcut to becoming rich
2. Money Management
3. Trading should be treated as business
4. Capital is the key
5. Protect your trading capital
6. Continuous learning
7. Keep going

Capital is the key

In trading, your capital determines the profit you are going to make. If you start with a small amount, for example, $4,000, and make a profit of anywhere near 3 to 5%, you will gain a mere $200 to $300 profit. That’s not much for even a hobbyist let alone a full-time trader.

To overcome this, you need to invest a substantial amount into trading. Let’s say you have a $20,000 trading account. If you maintain a healthy 3-5% profit rule, you will get anywhere between $1000 to $1500 per month.

The chart below shows the power of compounding interest. If you started out with $0.01 and doubled it everyday, you would have $10-million by the end of the month.

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