Now, I can't tell anyone they shouldn't trade. That is not my or anyone else's job to do. You would hope that they would know the difference between trading funds that they can AFFORD to lose and those that they cannot. When a trader tells me that they really need to 'scrape up' some funds to get their account back up again, and that an extra hundred or two would help out, then I know that this trader is trading scared. It tells me that he/she has no savings account when they talk in terms of just a few dollars. I can see thousands, but not a few hundred.

Now, that is each traders choice, and not much we can do except give our advice. But for those who do have small accounts by choice (don't like to put all their eggs in one basket), or have small accounts because that is all they have available but can AFFORD to lose it without affecting their family and cir*****stances, and even those who have small accounts because that is all they have and unfortunately CANNOT afford to lose it but won't listen to warnings anyway, I offer some suggestions that may help you stay in the trading arena for a long time.

Where am I?

If your account size is: $2000 or less
You are in dangerous territory. Even if you can afford to lose it, why keep it this low and then have to keep sending in more money each month? If you can do so, bring it up to at least $5000. If you cannot,then my suggestion is that you either trade Mid-Am one contract only at a time, or you trade options. Keep your risk below $200 each time. Going over 10% of your account is going to get you hurt.

$5000 or less
Suggest that you keep all your trades at a $200 risk maximum. This pretty much means to keep out of markets such as Pork Bellies and Soybeans. Trade the smaller markets in terms of tick value, such as Cattle. Cattle is a good market for small accounts since it usually doesn't move too fast and you can get in with small risk dollar amounts. Trade only one contract at anytime, never double up or average down. Place your stops when you place your order and never move it until the market is moving in your favor.

$10000 or less
This is where small account maxes out and you start to enter the low-mid range. Here you can increase your risk to $300 per contract or 2 contracts with a total risk of $500. Never exceed 5% of your total account size. The same rules apply as with the other small account sizes in that you should place your exit stop with your entry order. Hold firm until you are in profit. Never average down, though you can double up only after your in profit at least 10% and your entry is on a rally or retracement, placing again your exit stop at the prescribed $300 risk or less. You'll still end up in profit if hit. You can trade faster markets as well, but don't be nuts and trade Orange Juice!

Unless you are in the $2000 or less category, don't bother buying options. You can do better going straight futures with a defined risk in a slow market than playing with 'buying' options, even if your risk is limited to its cost.

NOTE: A few months ago I wrote an article entitled 'Staying In The Game.' It dealt with small accounts under $5000. The idea was that whenever you lost a trade, you were to replace the amount lost by one and a half times that amount before you allow yourself to make another trade. So if you lost $200, you pay yourself back $350 before you proceed. This assures you stay in the game, and your account grows anyway.

Note: About the Author
Rick J. Ratchford is President of ProfitMax Trading Inc. He is a full-time commodity trader for his own account as well as assisting other traders. He has been a computer programmer for more than 20 years and a trader since 1990.