There are more investors entering the financial markets than ever before. You don’t need to set up a corporation or have millions in your account to begin investing in instruments like commodities and foreign exchange. With the help of a top broker, you can easily make your first trade in minutes.
With a smaller investment, however, you have an uphill battle to face. Smaller margins mean fewer risk management options and a tighter risk profile; you can only let the market move against you for so long before you get margin called.
So, how can you maximize the potential of a relatively small investment? These expert tips and tricks will help you boost your ROI in a safe and controlled way.
Adjust Your Leverage
Leverage is always a two-edged sword, but that doesn’t mean you cannot use it to your advantage. While it is still risky – dangerous – to set your leverage too high, you can utilize leverage to turn your small investment into a sufficient margin.
Switching from 50:1 to 100:1 alone allows you to double the size of your position. Depending on the instruments you use, you can double your profit per point or pip with this increase in leverage. Faster profit, however, also means bigger potential losses.
That is exactly why you need to use leverage with extra care. Make sure you have the right plant to mitigate the added risks before moving forward with trading using more leverage.
Choose Your Instruments
Rather than using your small investment to enter the stock market, you can also leverage that investment using other instruments. Instruments like CFDs and forex are known to be more volatile and more promising for smaller investors.
Trading CFDs is one the best ways to leverage an investment since you have access to more trading strategies. Some brokers allow you to scalp on the market, leaving you with the opportunity to seize smaller profits frequently.
Some instruments also offer bigger returns and higher volatility than others. Choosing the right instruments to trade can significantly affect your profitability. Don’t forget that you can also get lower spreads and other advantages.
Select the Right Broker
That brings us to the third approach, which is working with a broker that favours small investors. As mentioned before, not all brokers allow scalping on their trading platform. Having the option – even when you don’t actively use scalping to bank profits – is a huge plus.
Leverage options and spreads are also factors that you must consider when choosing a broker. Trading on lower spreads is highly profitable. You have less trading cost to deal with when you open a new position in the market.
Last but not least, make sure you choose a broker that offers a fast and reliable execution. The only way you can secure your investments and bank more profits is by making the right trading decisions and executing them at the right time.
Combined, these simple tips will help elevate small investments to a whole new level. By utilizing leverage, choosing the right instruments to trade, and working with a low-cost, small investment-friendly broker, you can really push your profits in the financial markets.
