How important is trading account size for ones success in trading? Do you think it plays a role?
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Hi,
If you’re serious enough for trading, then it doesn’t matter.
Stop thinking about the account size. This will just hold you back.
Instead, think about %profit/loss not Absolute profit/loss.
Stop these 2 things right away:
- “Mai itna lgau ga, tho mujhe itna profit ho ga”.
- Stop calculating profits on calculator or excel.
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Trading account size matters it is relevant but only if one has substantial experience in market atleast 7 -8 year trading experience. But having a meaningful trading account as an newbie trader might be a recipe of disaster.
Those who say you can build trading account from scratch is a myth how will it happen suppose you have two lakh worth of trading account which is insignificant now a days for a professional trader atleast he needs minimum ten lakh worth of capital to survive in this market attributed mainly by higher futures margins .
So for an amateur small account is sufficient since he is going to learn the game gradually with experience and often chances are he will blow his account.
Sizeable account matters only when one has gained experiance which is not available anywhere else apart from live market first we bleed profusely then we learn the game and in all likelihood only then we can makeout respective return from market which will take a long time.
As leaning curve is most difficult to pass.But once we are done with it I assure you rewards are worth the struggle.
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If you’re starting out, you should not worry about this. There is a certain minimum required for say, options trading to make it meaningful. But if that’s not the case, you shouldn’t even think about it.
- Start Small.
- Record in your Trade Journal, before and after markets as to what you were going to do & did, and reflect on that.
- Think Percentages (%) always - this goes for investing as well as trading.
- Once you’re consistently generating a certain percentage - great, time to scale slowly. (reinvest your proceeds back to increase your trading capital).
May your longs go up, and shorts go down!
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Yes Sir, this is the most important thing for me to make a habit of.
This is so true Sir. So I have to trade with the amount that I can afford to lose entirely till the learning phase is over.
Thank you Sir for these bullet points. I have been maintaining a written journal. The rest I’ll implement immediately.
Thank you Sir for the wishes.
Trading Account size will grow if you are consistently compounding with good trades.
Yes Sir I understand that. I was just wondering if the success in trading is directly proportional to account size. After the learning curve of course. Like a person with bigger capital has an edge over a person with smaller account.
Success, capital, return, these all are subjective. What is success to me might be negligible to you and what is capital to you is net worth to me, so if one has become knowledgeable, experienced and has a strategy in place, with loss management, and is confident, he can think of scaling up.
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Small capital - Small can be different for different people, say small = capital < 5L for a single system.
In futures, position sizing will be a big issue, so probably better to go with options instead.
In stocks cash, smaller account => smaller impact. You have less slippages and you can take trades in stocks that higher capital wont allow. In brokers like Zerodha, small orders have unreasonably high cost. You can manage that by moving to say Finvasia. With that in place, i would say smaller account say of 5L can make decently more in % vs an account of say 50L due to slippage alone. In addition you can access wider universe.
But money matters not percentage. Once someone has the skills to trade and handle uncertainty and risk, I think scaling up/compounding is VERY important. Future returns are uncertain - they might reduce/they might vanish and recognizing/adapting can take time. We will end up becoming slave of the market if we don’t increase capital to a decent size that makes say atleast 2-3 times what you need.
With double the capital, you will still make same money even if returns reduce by half. With higher capital you absorb blows better and survive, Plus you can trade multiple systems and enjoy benefits of diversification with higher capital base.
This applies strongly to a full time trader, otherwise perhaps its less of an issue as you have regular stream of income. But anyway, compounding works so well - best to take advantage of it. I had checked long time back - making 100% per year without compounding is worse than 20% compounded over say 20 years.
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Thank you Sir for a detailed view. This gave me a new perspective.
So scaling up is one of the most important aspects to look into while going with a strategy.
Just use the best system(s) you have today that can support your capital. Scale it as long as it allows. Add more systems along the way to diversify and also to allow trading with larger capital. Later on you can prune out what you don’t need. 20 years compounding can probably only be done on longer timeframe systems/investing, but if we start with that today returns probably will be lower too ( just guessing but that’s what makes sense as there is no free lunch).
If you are already rich enough, then i guess no need to go through all of this - just focus on good scalable systems that combine well.
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Not a rich guy in any of the countries in this world. 
I think the account size matters and the SMALLER the better.
Large orders increase chances of slippages.
Plus there are pschycological reasons. An smaller account will keep you relaxed and there will be fewer chances of making mistakes.
yeah, but at some point there comes a necessity to increase the account size if we want to make a living out of trading. Also i think we can hedge better and diversify if we have bigger account.
Yes but that point comes at least after a few years of experience. And if a person wants to be a professional trader, as with any other profession, he has to learn, like he learns for any other academic course, then practice, have discipline too to overcome the psychological part of trading, have an income stream, however small it is to meet the needs. All of these take time.
So even if capital can be scaled up quickly, without a proper perspective, seriousness, some experience, some acceptance, a plan, it is hard to become a professional trader.
Of course, each person is different, so some may achieve all of this in less time compared to others.
I am scared now.
You should be, this is not a game. Of course you can think of this as a game, but if you think so, don’t expect much. If we consider something to be our profession, then we have to be professional, there are no two ways about it.
If I want to be a software engineer, I should be willing to be awake for long hours, work on holidays, learn new things etc, if I cant do that, I cannot expect a good salary at the end of the month, I cannot expect a good hike at the end of the year, I cannot expect a chance to work in a foreign country.
So if I want to be a professional trader, I have to be immersed in the market, learning new things which help my strategies to get better, read the same again to strengthen my conviction, thankful when profits come, agree when make losses, be disciplined, be robotic if I can etc.
Got to respect the market, and cannot show my middle fingers to the market, unless I am leaving the market for good, and will never come back 
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I have only one lakh which is expendable to study the market. I have transferred only 10k right now learning bit by bit.
My dream is to trade Nifty or Banknifty one day professionally.
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Sure. We all start at some point. I was just pointing out to the fact that, to become a professional trader takes a lot of effort, time, experience etc.
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Size of the trading account does matter if you are biased to option selling. Now that you need more funds to keep up the same ROIs
For professionals who buy options to make money - the value in the account does not matter.
read here
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