A quotdoablequot way to take a $300 account to $1 million in 45 months
Were you aware that you can take $300 and earn $1 million in your trading in only 45 months by doing something that is actually doable? This may be done by averaging 20 percent per month. Thus, you believe 20 percent per month is unrealistic? You believe earning $1 million in 45 months on a beginning trading account of $300 is unrealistic? Well, read on!
Below is an article I came across about five years ago of which I printed out and put into my trading folder. I have actually condensed it for this article, otherwise it could be longer than it's here. I want to first admit that I have not made a thousand dollars doing so. Due to several life distractions, I have never fully commited myself to FX trading the way I need to, and thus I'm not a prosperous trader. Do not base the options of what can or can't be done during my lack of success. Anyways, a thread here in the forum made me think of this guide, after someone in that thread said it'd take an account of a few hundred thousand dollars to earn a living off of trading. My purpose of going through the time problem of typing all this info within this post is to show that, beginning with only a 300 super-mini account, it's possible to make a huge amount of money in under 4 years. So, without further delay, here is the article below of which I have condensed:
The real POWER of this earning potential with all the Forex is your financial leverage. We can buy 1 lot (super-mini) for just $5, and the broker/bank sets $1000 in the transaction on the behalf. There is just not any leverage such as this anywhere else in the world. Now, the way we optimize our leverage and earning power is to trade the maximum numbers of lots per transaction. That is going to be determined by our account balance, our risk variable, and the stop loss used in the transaction. Thus, let's look at this closer:
If we open an super-mini account with $300 and we decide we'll abide by a 5 percent risk variable, it means commerce #1 we will not have over $15.00 at risk in the transaction ($300 x 5% = $15.00).
We all know that what is at risk in the trade is the amount of pips in the prevent loss times the worth of this pip (in this scenario we are utilizing a 25 pip stop loss and the pip value is .10 pennies per pip, hence 25 x .10 = $2.50). This permits us to ascertain just how many lots we can optimally trade AND yet stay within our 5 percent risk factor. Let us review:
Account balance: $300
Risk Factor: 5.0 percent
at Risk in Trade: $15.00
Stop-Loss: 25 Pips
Worth of Pip: $.10
Value/Risk of Stop Loss per Trade: $2.50
Thus to calculate the maximum amount of lots we can trade:
[(Account Balance) x Risk Factor) / (Value of Stop Loss per Trade) = Max Lots in Trade
[($300.00 x (5.0 percent)] / $2.50)] = 6 lots
$15 / $2.50 = 6 lots
By always trading the maximum number of lots (and remaining within our cash management risk variable), we can optimaize our earning potential and attain this with very calculated and conservative risk.
Raw Pips Versus Leverage Pips ... The Way It Determines Our Income Possibilities: Should we trade 1 lot, and profit 5 pips, just how much did we just make? Well, in a super-mini, remember, a pip is worth $.10. So, with a 5 pip profit, we just earned $.50, right? Right.
Therefore, if we profit 5 pips, but we exchanged with our greatest lots (as permitted by utilizing our risk variable), we would gain 5 pips x 6 lots, or 30 pips. 30 Pips x .10 = $3.00.
Putting It All Together: If we've got $300 in our account, in order to earn a 20% return (regardless of time frame) we would have to earn $60 ($300 x 20% = $60).
We also understand with $300, we can trade 6 lots in a trade and yet remain within our 5 percent risk variable egy. We just discovered that 6 lots, with a 5-pip profit, earns us $3.00. Thus, to earn $60, if will take 20 such 5-pip transactions:
1 commerce of 5-pips earns us $3.00 ... afterward 20 5-pip trades will earn us $60 (20 x $3.00 = $60.00)
Therefore, 100 raw pips are necessary to acquire a 20% return when using a 25-pip prevent loss! (When using a 5 percent risk variable and maximizing the amount of lots trades)
Establishing A Trading Plan To Earn 20% On Your Account We all know that the Forex transactions 5.5 days a week (beginning Sunday 2PM eastern), which basically is a 6-day trading week. That means there are approximately 25 to 28 trading days every month. If you took the weekends off, a day to visit the beach or the hills, or to sleep in when it rains, let's assume you could average 20 trading days a month.
Therefore, in the event that you extablished a goal of earning JUST 5 PIPS daily, you would gain 100 pips on your 20-day trading month. 100 pips provides you 20% on your full financed account!
As soon as you have some skills, you will observe that you can use those skills and set a goal of 20 pips per day trading. This is above the trader spread, and considers some reductions (profit 5 pips, profit 4 pips, shed 3 pips, profit 7 pips, profit 5 pips, shed 4 pips, profit 6 pips ... for a entire profit of 20 pips). Therefore, you can earn 100 pips in a 5-day trading week. With the appropriate skills, you can earn 20 percent per month, week, or even day!
Summary: With a 25-pip stop loss, it will always take 100 pips to earn a 20% return. It is not dependent on time, just when you earn those 100 pips.
Finally, it is possible to take your $300 number, put it in an Excel Spreadsheet, and calculate another cell by taking the $300 and providing it a 20% return and ending up with $360. Then, take the $360, and provide it 20%, and so on. What you would discover, is that in just 45 periods of 20% return, you can take your $300 and turn it into $1,097,000.
If you were earning a 20% return per month, so it would take 45 months to go from $300 to over $1 Million (and you did this earning just 5 pips every day during the trading month).
If you were earning 20-pips daily (providing you a 20% return per week), it would then take just 45 weeks to go from $300 to over $1 Million.
Do you see HOW REAL the possibility of this Forex really is?
OTHER USEFUL NUMBERS:
To acquire a 20% return, it takes 100 pips
To acquire a 25% return, it takes 125 pips
To acquire a 30% return, it takes 150 pips
EDIT: It may not have been made clear enough in the above article the 5 pips a day is only an AVERAGE. You DO NOT have to actually make 5 pips daily. It's possible to create 25 pips on one day and not need to trade for the remainder of the week (using a 25 pip SL and 5% risk per transaction). Or you can make 100 pips on one day and not need to trade the remainder of the month. There are a range of methods to receive your 100 total pips per month without having to create those pips every individual day. As the author says in the article: With a 25-pip stop loss, it will take 100 pips to earn a 20% return. It is not dependent on time, just when you earn those 100 pips. Bear in mind, the author's bottom line objective is to make it workable for you to earn 20 percent per month and to compound your cash.
