“Compound interest is the greatest mathematical discovery of all time. He who understands it, earns it…he who doesn’t…pays it”
_Albert Einstein
[B]Thought I would create a post to answer alot of question like :[/B]
How much money do I need to start Trading ??
What size lots?
How can I get rich ?
Can I make a living for trading ?
I have Created a Plan and I would like to share My ideas
Trading is a business and you need a business plan with Goals, targets and adjective and Personal Control
[B][U]THE PLAN [/U][/B]
The maths show - if you start with $500 you will take 7 years to make $1 million
[U][B]Starting Account Balance :[/B][/U] $500
[B][U]Target Return[/U][/B]: earn 10% a month = $50
So far you may be thinking “easy” in most people eyes this is target is very achievable. Even some beginner can hit it lucky and make $50 … the hard part is making is continually through out year.
[B]You need create your own trading strategy - only discusing the maths and compounding effect here [/B]
[B][U]Adjective[/U][/B]
To make $50 you will need account with $500 available.
You need to make 500 pips a month trading 0.01 lots
=$50 profit ( 10%)
Which in most people eyes is very capable
[B][U]Compounding effect[/U][/B]
Month 1 -Account $500 X 0.01 lots X 500 pips = $50
Month 2 -Account $550 X 0.01 lots X 500 pips = $50
Month 3 -Account $600 X 0.01 lots X 500 pips = $50
Month 4 -Account $650 X 0.01 lots X 500 pips = $50
Month 5 -Account $700 X 0.01 lots X 500 pips = $50
Month 6 -Account $750 X 0.01 lots X 500 pips = $50
Month 7 -Account $800 X 0.01 lots X 500 pips = $50
Month 8 -Account $850 X 0.01 lots X 500 pips = $50
Month 9 -Account $900 X 0.01 lots X 500 pips = $50
Month 10-Account $950 X 0.01 lots X 500 pips = $50
Month 11-Account [B]$1,000[/B]
After 11 months you would of double your money ( or faster if you avg better then 500 pip per month)
[B][U]Nest step[/U][/B]
Once you have $1000 you can begin trading 0.02 lots every month your target is 500 pips = $100 per month
Month 11 -Account $1,000 X 0.02 lots X 500 pips = $100
Month 12 -Account $1,100 X 0.02 lots X 500 pips = $100
Month 13 -Account $1,200 X 0.02 lots X 500 pips = $100
Month 14 -Account $1,300 X 0.02 lots X 500 pips = $100
Month 15 -Account $1,400 X 0.02 lots X 500 pips = $100
Month 16 -Account $1,500
It take you 16 month to increase to $1,500 … Increase lots size 0.03 …$150 per month
Month 17 -Account $1,500 X 0.03 lots X 500 pips = $150
Month 18 -Account $1,650 X 0.03 lots X 500 pips = $150
Month 19 -Account $1,800 X 0.03 lots X 500 pips = $150
Month 20 -Account $1,950 X 0.03 lots X 500 pips = $150
Month 21 -Account $2,100
21 month later you will have $2,100 …Start trading 0.04 lots…500 pips per month ($200)
[B][U]Total so far 21 months[/U][/B]
Now you get the picture you increase your lots 0.01 for every $500 you have in your account
[B]Thing will get very boring and it going to take you a while [/B]
But after 3 years 5 months (41 months) you will have $5,100 - this is where you will see the compounding affect more
- as you have $5,000 ÷ per $500 = you will be trading 0.10 lots =
you will be making $500 per month which mean you will also increase your lots size every month
[B][U]Personal Control[/U] [/B]
This it the hard part of all the calculation
When starting off with $500 account , you may risk more and make $50 or $100 a month. history show that the more money you have the less risk your willing to take.
So you have a few options
[B][U]Options 1[/U][/B]
If you feel comfortable with the same plan - it will take you 7 years to become a millionaire
[B][U]Options 2[/U][/B]
You keep it up until hit either $5,000 or $10,000 what ever you feel comfortable with = when you want to lower your risk
1.[B]Change the target[/B] to 250 pips per month
[B]Or [/B]
2.[B]Half or cap the lots size[/B] to EG 1.00 standard lot and [B]continue earning[/B] 500 pips per month
Normal 10% ( $10,000/$500=20 … …20x0.01 =0.20 lots)
Less Risk 5% ($10,000/$500=20 …half …10x0.01 =0.10 Lots)
It will take you 10 years to make $1 million
[B]Or[/B]
3.[B]Half or cap the lots size[/B] to EG 1.00 standard lot and [B]change the target[/B] to 250 pips per month
It will take you 12 years to make $1 million
Now this is very realistic - I know alot of people here with $10,000 or more and trade more then 0.10
You even hear people with $2000 or less trading 0.10
[B][U]What part do you do you think you can’t achieve ?[/U][/B]
500 pips a month
If you cant achieve 500 pips a month you may need to review your trading.
There are many Forex signal provider / Manage Forex account / zulutrader that can avg 500 pips a month - even the free trade recommendation on baby pip
If you can’t hit it pay for a Forex signal . Even 250 pips will get you $1 million in 14 years
sorry about the grammar . typed it on my phone and will update over the coming days
