Grow Your Small Forex Account Slowly But Surely
for such a long time, because it is what I have also tried and it has worked very well for me. In this article, I am going to talk about another important factor that helps your small account grow. It is the consistency factor. I am going to explain it in details and tell why it is so important. . Therefore, before I talk about the consistency factor, I have to give you an introduction which is very important and I want you not to skip it.
If you are new to Forex trading and you are serious to become a professional and consistently profitable trader, first you have to pass a few stages. You have to learn the basics which is very easy and doesn’t take you more than a few days. Then you have to learn a trading system and start demo trading your trading system to master it.
You can claim that you have mastered your trading system when you make profit for 6 consecutive months at least. Your 6 month demo trading track record should be solid and consistent with a clear pattern of winning and losing trades. I mean if a professional trader checks your track record, he should come to this conclusion that all the positions listed in your track record are taken by a disciplined and precise trader who knows where to enter the market, where to set the stop loss and how to maximize his profit. Your gains and losses should have a clear, consonant and consistent pattern of small and easy to recover losses and big gains.
When you achieve such a track record with your demo account, you should open a live account with an as small as possible balance. Indeed, this is the second stage of your demo trading. You have to repeat what you have been able to do with your demo account. It means you have to make profit for 6 consecutive months at least. Your live trading track record must have all the features I described above. When you complete this stage, you can say that you are a junior consistently profitable trader.
You might think that this process takes a long time and you want to make money much faster. Believe it or not, this is the shortest way to become a profitable Forex trader without any risk.
Those who open a live account after a couple of months of demo trading and start trading with the money that probably they cannot afford to lose, or those who think demo trading is stupid and they have to practice with a live account from the beginning, neither will become a profitable trader, nor they can save more time and money than you. They will give up after wasting a lot of time and money. I have seen too many of these people. Some of them have been practising and losing money for over 20 years, but they are still losing. Yes, you heard right… 20 years.
Long Term Consistency
Consistency is very important when you demo trade to master your trading system, when you open your small live account to practice your trading system for 6 more months on a live account, and when you start trading as a full time professional trader.
What do I mean by consistency?
you know very well that I am strongly against trading with a too big live account. There are several reasons behind it. One important reason is that trading with a big live account creates a lot of harmful emotions that prevent you from taking the right decisions, even if you have been able to have a good 6 months track record with your demo and live accounts.
Trading a big amount of money is not a joke. By “big” I mean the money that looks too much to you. The money that probably you cannot afford to lose. The amount of this money can be different for different traders depend on their financial situation.
Even if you achieve an unbelievable 6 months track record with your demo and small live account, you will make a mess if you start trading with a big account after that. Don’t let losing a big amount of money teaches you the lesson. Learn your lesson without losing any money through following the other’s experiences and advice, and avoiding the others’ mistakes.
The other problem that trading with a big account can have is losing the whole account because of the Forex market shocks that can occur once in a while: The Swiss Franc Tsunami
So what is the solution?
After achieving your demo and small live account 6 months track record with the quality that I explained above, you should either keep on trading with the same small live account, or just add a little more money to it. If it is already doubled, then withdraw the principal and keep on trading with the profit you have already made. Doing so, you will have no risk anymore. I mean you will not risk your hard earned money.
You can keep on trading with such a live account and grow it slowly but surely. This is possible to do very easily with the power of compound interest if you don’t withdraw your profit and let your account grow.
At the beginning of the work when you see that your account is too small, the inner demon starts tickling you to add more money to your account to make it easier and faster to grow it. That is one of the harmful emotions that you have to be aware of and avoid. You don’t have to add any money to your account, because it doesn’t save the time you expect it to. It only increases the risk. You can easily grow your account and turn it into the balance that you want if you keep on trading patiently.
So… if you keep on trading patiently…
This is what consistency means. You have to check the charts each and every day and take the formed trade setups according to your trading system.
Consistency is necessary when you demo trade to master your trading system, when you trade with your small live account, and when you have proven that you have become profitable and you want to grow your live account.
Consistency covers two things:
1. Regular following of the charts and taking all the strong trade setups.
You have to do your job each and every day regularly and consistently without getting out of the right track.
2. Some of your positions will hit the stop loss and you will lose money, no matter in what stage and how experienced you are. This is what I can guarantee. This is normal and is part of the game. You have to accept and treat it like when positions hit the target and you make money. The most important thing is that you have to set the stop loss religiously for each of the positions you take. Losing money because of hitting the stop loss should not prevent you from setting the stop loss. If you don’t set stop loss for your positions, you will wipe out your account sooner than later no matter how much profit you have made and how big your account has become. This is another thing that I can guarantee.
You keep on following your way and taking the new chances and opportunities (trade setups) without being affected by the losing positions. As I said, some of the positions hit the stop loss and this is normal. It should not cause you to become afraid of taking the new trade setups. Not all the trade setups are going to hit the stop loss. If you take the strong trade setups only and you set a proper stop loss for all positions, you will be profitable at the end of the month definitely. Be consistent in taking the strong trade setups and have no fear of losing.
This is how your small account grows slowly but surely.
Bill Gates says,
“Do the right things long enough, consistently.”We have to analyze the above sentence like this:
(1) Do the right things (2) long enough, (3) consistently.
This is exactly what you have to do to grow your account. You have to do the right things which is checking the charts and taking the strong trade setups every day, for a long time, consistently.
I hope you have got what I wanted to tell you about consistency. I cannot emphasize more how important this factor is. Make sure you have got and will follow what I explained.
The last thing I’d like to cover in this article is about the time it takes to grow your small account. Traders have different styles and each of them needs a different time span to grow his account.
You Can Grow Your Account Much Faster than What You Think
Most traders think that they have to open a big account and make a constant amount of profit every month. For example they open a $500,000 account and make 1-10% profit every month. I already explained how hazardous this method is. Fear of loss doesn’t let you trade properly no matter how skilled and experienced you are. I have seen so many big account holders who didn’t dare to touch their accounts. Those who dared to trade with their accounts made terrible mistakes. I witnessed how one of my friends blew up a seven million dollar account on 2008.As I mentioned, the solution is in growing the small accounts. You can open a small account with the money that you can afford to lose, so that you won’t have any emotions and you can treat it like a demo account. First, you have to double it and withdraw your principal to lower your risk to zero. Then you have to set a goal and keep on trading until you reach the goal. For example, you open a $5000 account and trade until it turns into $100,000. Then you withdraw the profit ($95,000) while you have already withdrawn the principal at the beginning of the work. Then you repeat the same process over and over with this difference that you can start from $10,000 in the second round and turn it into $200,000, and $30,000 in the third round and turn into $300,000 and so on.
Now the question is how long it takes to turn a $5000 account into $100,000?
Novice traders think it takes too long, and so they prefer to start with a big account at the beginning, but this is not true.
Using the power of compound interest, you can turn a $5000 account into $100,000 in two years if you make 13.30% profit every month. If you keep on trading for one more year, the account will turn into $447,000. This is how compound interest works.
The good thing is that while making 5-10% profit from a $500,000 account is too hard and stressful and there is always a risk to lose the whole account, making 25% profit with a $5000 account is a piece of cake. A $5000 account will turn into one million dollar after two years by making 25% profit every month. Of course I don’t recommend you to hold such an amount of money with the broker for 2 years. I am just explaining how long it takes to grow your account. You can trade for 14 months and grow the balance to $113,000. Then you can withdraw the profit and leave $10,000 in your account. You can grow the $10,000 account to $227,000 after about 14 months.
I don’t want to say anything to make some people attack me and accuse me of misleading the others. But there are traders who make much more than 25% profit every month with the small accounts like $5000 and $10,000. They have not achieved this overnight. They have repeated their success several times and it has become too easy for them. This is what you can also do if you want. Practice makes perfect.
Now compare this method of money and account management with opening a big live account. If you open a $100,000 or a $500,000 account, you will hardly be able to make 25% profit every month, because as I said the emotions having a big account will trigger don’t let you trade properly. Chances are you don’t dare to touch the account at all.
Chance are you stop trading when the first position hits the stop loss and you lose 2% of your account which is $2000 with the $100,000 account and $10,000 with the $500,000 account. You are also aware of the other risks it has. In spite of this, let’s say you choose this method and you can make and withdraw 5% profit every month. It become $5,000 per month or $60,000 per year as a constant income with a $100,000 account. Compare this with $227,000 you can make from a $10,000 account in 14 months.
As you see it is a big difference. Growing a small account using the power of compound interest makes a lot more profit. But there is something more important than money. It is the peace of mind you will have when you start and trade with a small account, whereas when you trade with a big account you experience a lot of stress and pressure. What if you get up one morning and see the whole account is gone due to the Forex market or broker problems?
The conclusion is that trading and growing a small account is much safer and easier. It is risk and stress free, and it makes more profit.
You are broke only when you give up.
Good luck
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