Before we jump into the details, we need to first look at your mindset, your expectations and what is achievable. We all know that you're not going to make a million dollars in 6 weeks, so we need to align your goals and your expectations. You wouldn't learn to be a doctor in 2 days, similarly you won't learn to trade in 2 days.
Let's assume you've got a trading account of $ 3000 or less. The first step is to understand that the reason you are not making money trading is not down to the size of your account. If you can grow a small trading account, you can grow a large trading account, and vice versa. The simple truth is that when trading a smaller trading account you are typically more desperate to grow it faster. You need to control your emotions, control your desire to grow the account at an exponential rate and understand what is achievable. You cannot allow desperation, or a 'need' to make money to creep in or you will simply blow up your account, through trying harder and risking more until there is nothing left.
Look at the percentage growth, not the monetary growth.
Focus on trading the markets, on making% growth, not on the money you're making to begin with. As an example, if you've got a $ 3000 trading account and you're consistently producing $ 300 a month, that represents a 10% growth on account, and will triple your trading account every year. That is huge% growth, even though the money seems small to begin with. We all understand that trading is a marathon, not a sprint, so expect to be actively trading for at least 3-5 years. I always start off targeting people at 3-6% growth per month, and increasing that% as their ability improves.
If we take 6% growth per month, this will double your account every year. Which granted, on a $ 3,000 account, is only $ 3,000 profit, but your account will grow from $ 3,000 to $ 6,000, to $ 12,000, to $ 48,000 to $ 96,000, to $ 192,000, to $ 384,000, to $ 768,000 to $ 1,536,000. You are putting in the same amount of work at the end, as you were at the beginning, but as the account grows, the financial return from the account grows and grows and grows.
Treat a small account like its 100 times greater than it actually is.
Improve your discipline by imagining your account is 100 times greater than it is, or by imagining you are risking all of your account per trade. DO NOT actually do it, but think how your discipline and quality of trades would improve if you had to put all of your account on each trade. The importance of this exercise is not in aggressive risk, but in improving discipline. Remember that growing a trading account successfully is based on taking as many winning profitable trades, with each winner making as much as possible, while losing few trades and losing as little as possible on each loser. In essence taking as many steps forwards, while taking as few steps back. The importance here is on taking as few losers as possible and making them as small as possible. Keep the drawdowns small, and the big winners will take care of the rest.
A consistent track record, is worth far more than you could possibly imagine
Traders that start with small accounts, should seek to achieve a consistent track record. A consistent track record can really take you places. If you're doubling your money every year, isn't it feasible that you could do that for others too? Think of everyone you know that has the finances to put a minimum of $ 2000 in a trading account and forget about it for a few years. Parents, grandparents, angel investors, even friends. Once you've got yourself a solid year track record, start showing people. You're going to have a lot of interested parties, as I don't know anywhere else you can get 100% + returns each year, and I'm pretty sure they don't know that many places either. If you are able to offer that service you'd be amazed at how many people suddenly find a few thousand to put into an account.
Of course, you can never guarantee future performance, but one of the best ways to grow an account successfully is to accept funds from other investors and trade it for them in something called a PAMM account. You are then able to charge a% of profit, so as an example, you could charge 20% of the profits each month, or each quarter. Your money is in your trading account, their money is in their trading account, but you can trade them both at the same time. Once you're a consistent trader, this is a great way to grow your trading account even faster as you can put the profits straight into your account. Please do not do this until you are consistently profitable for at least 1 year on your own money.
Create a Trading Plan, with proven Trading Strategies, understand how they work, and stick to them.
One of the biggest differences between those who make money trading, and those who try, is a trading plan. A trading plan will give you a solid foundation. Successful traders treat trading as a business, as a result they have a trading plan. A trading plan should include;
– What strategies you use
– Which currencies you trade
– What timeframes you trade
– When in the day you will trade and how long for
– Stop loss management
– Trade targeting and so on
Don't just do this in your head, write it down, it's far more effective. You should have proven trading strategies that you can use to make money from the Forex markets again and again and again.
Cut your losers short, let your winners run, and follow your trading strategy at all times. Chopping and changing strategies and digressing from your trading plan is a sure way to take more losers than necessary, which will massively impact your account growth. Following your plan gives you routine, and a structure to follow, and a far greater chance of growing a small trading account successfully.
What to do now?
I cannot force you to manage your money safely, master proven trading strategies, or remain disciplined long term, but if you are committed then you will need to dig deep to master these important factors and create a structured trading plan and routine to tackle the markets head on. Remember, learn to trade in a consistent manner, consistent actions generate consistent results. If you want it badly enough, you can succeed at anything. Ask yourself 'how much do I want to be a successful Forex trader'? and make the necessary changes to take your trading to the next level.
Source by Andy H.