Small account trading is tough, no doubt about it. You have almost no room for error as a small account trader, but you will be relieved to know that it can be done! I began my trading career with a $2500 account which I quickly turned into $7000 in the space of a couple of months. Like so many newbies I too thought I was "hot stuff" and began dabbling in things I knew nothing about (ie. options) only to wipe myself out a few months later.
My second kick at the can followed a similar path, but my demise was a little more prolonged (but also came at the hand of the option market).
The third try was better still as I finally "got it" when I encorporated strict management with support and resistance to give myself an edge over the markets that I never had before. I have to admit however that I've forgotten many of the challenges of trading a $5K account until I started the VIP program where I give tailored advice to small spec, real money traders.
It's still a bit of a learning curve as I struggle to get a handle on how much risk the VIPers are willing to accept with their trades. It is one thing to take an iffy trade with your own money, but quite another to suggest someone else do it with their own. We are making progress however, and after a bit of a slow start, I think we've just about got the program to a place where the recommendations will be the *best* for the small spec.
One thing that is not often mentioned about the small spec trader is attitude. Small specs, by their nature, are usually desperate traders. This is a dangerous position to be in because your "desperation" to do well can lead you to make poor decisions - especially from a position trading point of view. Day traders have the luxury of fudging a trade and can still take advantage of a move, but a position trader has to be a little more cautious and much more committed to a trade.
Unfortunately losses are a part of trading. You will never hit all your trades. As a position trader you need to be able to accept losses when they occur (that's not to say you have to like them) and get back to the business of trading. The more objective you can remain about your account and trading, the better it usually will work out for you. It's very difficult, I know, but I do believe it is an important characteristic of the successful trader.
Regarding multiple contracts, as a small trader I would suggest you avoid multiples UNLESS you are looking for a very short term move. Many of my trades last for a couple of days to a weeek, so I usually only recommend one position; however if you are looking to captialize on a smaller move, then multiple contracts will add more punch to your trades. Unfortunately trying to take small profits out of the markets (ie. ala Tom) usually requires intraday management, or a very cooperative broker.
My best advice to you is:
Start small, risk as little as possible, be choosey about your trades, accept looses as a part of trading, take profits when you have them (ie. manage and re-manage your risk versus reward), and NEVER give up! I'm convinced that my stubborn streak has been a definite blessing in learning to tackle the world of futures trading.
Erich
http://www.tradershelpingtraders.net
http://www.supportandresistance.com