Need Advice: Small Balance Trading

Trading Discussion
12

C’mon, pal.

Tell us what you’ve [I][B]actually done[/B][/I] — not what you’ve [I][B]fantasized[/B][/I] about.

[B]To fjl3,[/B]

I’m sorry that this is going to sound harsh, but facts are stubborn things. You said —

Now you’re asking us for advice on how you can start with $500 [I]— which is all you can afford to commit to this venture —[/I] and somehow (for the first time in your life) start making [I]consistent profits[/I] in the forex market.

Your plan depends on making, not only consistent profits, but [I]fabulous profits, consistently, week after week.[/I] Do you see the flaw in this plan?

I’m not done with being harsh.

Some pipe-dream is luring you back to this market, in the same way that dreams of getting even, or getting rich, lure desperate gamblers back to the poker table. Put the pipe-dream aside for now. Come back to it later, if and when your financial situation has stabilized.

Trading forex [I]— because you need the money —[/I] is a recipe for failure.

Expecting to become a profitable trader [I]— because you need the money —[/I] is a recipe for disaster.

Just about any alternative plan you can come up with, will be superior to this forex plan of yours. A part-time, minimum-wage, job at a fast-food restaurant will put more money in your bank account, week after week, than your forex trading plan.

No doubt, that’s not what you hoped to hear, when you came to this forum. I’m sorry to be the bearer of bad news. But, the facts of your situation are harsh.

.

13

[QUOTE=“Clint;714216”] C’mon, pal. Tell us what you’ve actually done — not what you’ve fantasized about. To fjl3, I’m sorry that this is going to sound harsh, but facts are stubborn things. You said — Now you’re asking us for advice on how you can start with $500 — which is all you can afford to commit to this venture — and somehow (for the first time in your life) start making consistent profits in the forex market. Your plan depends on making, not only consistent profits, but fabulous profits, consistently, week after week. Do you see the flaw in this plan? I’m not done with being harsh. Some pipe-dream is luring you back to this market, in the same way that dreams of getting even, or getting rich, lure desperate gamblers back to the poker table. Put the pipe-dream aside for now. Come back to it later, if and when your financial situation has stabilized. Trading forex — because you need the money — is a recipe for failure. Expecting to become a profitable trader — because you need the money — is a recipe for disaster. Just about any alternative plan you can come up with, will be superior to this forex plan of yours. A part-time, minimum-wage, job at a fast-food restaurant will put more money in your bank account, week after week, than your forex trading plan. No doubt, that’s not what you hoped to hear, when you came to this forum. I’m sorry to be the bearer of bad news. But, the facts of your situation are harsh. .[/QUOTE]

+1 for telling it like it is to the jokesters who come to my business expecting easy money only to get their asses handed to them.

14

Thanks for your feedback, but I feel I have addressed it. Plus, 5% is hardly fabulous profits, as you put it. Prove to me there is no one who has started with $500 or less, and is now taking in thousands or more a month, and I’ll give up on the quest. But you can’t, because it does happen. I have failed, I’m certain in the future I will again, but I learn from my mistakes and I will continue trying.

15

First and foremost, I don’t appreciate being referred as a jokester. And second, you yourself started at one point and had to learn, so perhaps be less quick to turn your nose up at others trying to do the same.

16

[QUOTE=“Clint;714216”] C’mon, pal. Tell us what you’ve actually done — not what you’ve fantasized about. To fjl3, I’m sorry that this is going to sound harsh, but facts are stubborn things. You said — Now you’re asking us for advice on how you can start with $500 — which is all you can afford to commit to this venture — and somehow (for the first time in your life) start making consistent profits in the forex market. Your plan depends on making, not only consistent profits, but fabulous profits, consistently, week after week. Do you see the flaw in this plan? I’m not done with being harsh. Some pipe-dream is luring you back to this market, in the same way that dreams of getting even, or getting rich, lure desperate gamblers back to the poker table. Put the pipe-dream aside for now. Come back to it later, if and when your financial situation has stabilized. Trading forex — because you need the money — is a recipe for failure. Expecting to become a profitable trader — because you need the money — is a recipe for disaster. Just about any alternative plan you can come up with, will be superior to this forex plan of yours. A part-time, minimum-wage, job at a fast-food restaurant will put more money in your bank account, week after week, than your forex trading plan. No doubt, that’s not what you hoped to hear, when you came to this forum. I’m sorry to be the bearer of bad news. But, the facts of your situation are harsh. .[/QUOTE]

Okay.

What I’ve actually done isn’t risk this.

But my post was actually to give some hope to people starting with small balances hoping to make it big in forex.

I’m not saying this isn’t impossible, but it’s a hard and long journey to get there.

Thing about small balances I’ve noticed is, is that when you start forex with a small balance you ALMOST ALWAYS need to start making money from this RIGHT AWAY!!

While the people starting with big balances (like a $100,000), a return of 10% to 20% PER ANNUM IS OKAY!!

So the small money has pressure to do well and also the pressure to do magic in place from the start while the big money has the calmness of trading properly for them.

I know when starting forex what hopes and aspirations of millions you have cause I’ve been thru all that.

Sadly the people staring with small balances gotta work extra hard to compound earnings and make the balance bigger before actually enjoying the profits of it.

Now in this case, the best way would be to set some targets to achieve (could be $10 or $20 or whatever) and go to that slowly.

I mean to determine how much you need as a balance to withdraw the monthly target of $300?

Getting there is first step.
Withdrawing is secondary in this case (sadly)

17

Yaniu.
Assuming he can achieve better than average consistent returns of 12% p.a., that would be 1% per month since he can’t compound as hes withdrawing every month.
To earn $300 with a return rate of 1% he needs to deposit 30, 000.

Going for ridiculously high returns will only blow his account, probably in month 1, almost certainly by the end of month 2.

I understand you want to give the OP hope, but expectations like this are just throwing good money after bad

18

eddieb I’m with you on that.

What I’m saying is that starting with a small balance is tough as it is.

Rarely do people start trading forex telling themselves “Okay I’m gonna trade efficiently for 2+ years so I can make decent amounts later”

But they always starting with the though “millions come to me kaching!” in mind.

It is possible to make something big with a small account but trading has to be insanely efficient and risking more than the usual trader would.

Trading with a small account actually gets people to grind harder than trading with a big balance yes?

But true, sadly with a small balance it’ll take time and some more time to start withdrawing what you need monthly.

19

I am going through this stage recently. I have a plan of a reasonable capital from which I become able to withdraw monthly profit. Yet that target is very far. I have the patience, it can take 2 to 2.5 years theoretically according to my plan. Let see what happens in real.

20

[QUOTE=“forexcrisp;714245”]I am going through this stage recently. I have a plan of a reasonable capital from which I become able to withdraw monthly profit. Yet that target is very far. I have the patience, it can take 2 to 2.5 years theoretically according to my plan. Let see what happens in real.[/QUOTE]

That’s the right attitude!

Consistency will yield results faster!

Good luck and all the best!

21

Hello again fjl3

I will try to give you an example (sample) of some of the performance of the so called world champions in trading & investing.

World Top Investor Competition

As you see the returns are not that impressive, even someone like this (considered a world champ for 3-4 years in a row)

Invest with Andrea Unger on Forex

made a return of over 600% in 2008. That is less than 1% a day (compounded). You realize that your goal is 12% daily, putting in mind you also want to withdraw every month, which (as Clint mentioned) takes away the power of compound interest.

Look, i m not saying it is not possible. Anything is possible and i admire your motivation and determination. Yet, it is not harmful to draw a line between “comfortable, easy goals” and “stressful, difficult goals”.

I personally started serious trading after 22 years experience as a stock market strategist. Being a CMT for 15 years i had the illusion making 1000% a year will be a walk in the park!! I wish it was that easy, it isn’t.

In time i learned to adjust my targets/goals in line with my performance, and i had to accept the reality as it is. Today, I feel comfortable trading the markets accepting whatever they offer, and i m glad the ego crushing part is mostly over by now. The hardest part is being honest to yourself, the sooner the better, so you stop wasting time & money. Once the gap between dreams and reality is closed (closer to reality dreams), profits will take care of itself!

ps: by closer to reality dreams, i m not saying that further away from reality dreams are not achievable, i m only saying the first is easier to achieve.

22

You cannot survive in forex market with small balance PERIOD. So if you have any plans to earn from forex then you need to have a big capital. Don’t compound to achieve big capital you won’t reach this goal very easily.

23

Is that so? What have you based this nonsense on?
There are many traders on here who started with small accounts and survived. The key is setting sensible targets and not going for stupid, high risk, targets and strategies.

24

Exactly right. People have done it, and are still doing it. It just takes time.

25

Yes, absolutely!

As GP00053 said in a post a long time ago, it is not about balance SIZE:

if you risk 10% on a trade, that is possibly too much regardless of the size of your equity, for example:

10% of a 500 unit account(Pounds/Dollars etc., choose your currency) is 50 units;
10% of a 1,000 unit account is 100 units;
10% of a 10,000 unit account is 1,000 units.

So, if you had an account of 10,000 units (say, Dollars) instead of 500 units, would losing 10% hurt any
less? At 1,000 units (say Dollars) lost on that one trade, you would go from 10,000 to 9,000 in one go,
and would only need another nine such trades to zero your balance…

As EddieB says, the key is ‘setting sensible targets’…

Cheers.

26

To make $300 / week (or $15k a year) while using proper risk management and position sizing, you’ll probably need $75k-$100k. With $500, you’ll definitely blow up.

27

But if you’re interested in turning your $500 into a large amount as quickly as possible, I’d recommend studying the Kelly formula. It’ll calculate your optimal position size (or bet) to maximise your gains. This link is an online calculator. Replace “Gambling Bankroll” with “Account Size”, and “Odds offered” with “reward vs risk”.

A Kelly Strategy Calculator

A few years ago I tried to do what you did, i.e. risk big with a small account. But there are dangers in the market that can wipe you out, even when you think you’ve taken appropriate precautions. For example, you might bet 20% of your account on a trade. You leave it open over the weekend, and price gaps against you on Monday’s open, way beyond your stop loss. That 20% loss suddenly becomes 40%. These things happen.

28

Thank you for that, Kevin LaCoste…

and, just to make our newbie colleague FJL trust us (as being real people), I have taken the liberty here to

dust off those interviews that Ananais did with me and you here on Babypips:

Kevin LaCoste: 301 Moved Permanently ;

PipMeHappy: 301 Moved Permanently .

Enjoy!

29

I will read these as soon as I get home from work, thanks for sharing.

30

No worries!

31

If you are trading with small capital, then keep your profit target small as well. Its simple as this, if you aim high with small capital then you will lose your capital also.