Is it possible to become rich with a little account ? ($ 5000)

Beginner Questions
1

Hi gentlemen :slight_smile:

From what i’ve read about money management, some rules comeback often like :

  • each trade should never risk more than 2% of your capital
  • A drawdown higher than 20% is too dangerous
  • The best traders in the world do not earn more than 10 % per year

So what’s up with little account like 5000 bucks ? How are we supposed to make money with such a little capital ?

If A pro trader spend 10 hours a day to do 10 % per year what can i do, me, novice, with $ 5000 ?

Are little accounts a fraud to steal money from the poor guys who want to become rich ?

Is it possible to turn 5000 into 500 000 $ in less than 100 years with these rules of money management, knowing that you can’t trade all the time because you have to work to live ?

Thanks.

PS: serious answerds please.

2

Well, with the great skills and knowledge, a best FX trader can get 1-3% weekly return. So, do your math.

Good Luck and happy trading!:slight_smile:

3

Well, you have to assess your answers a little more and think on them some.

The “best traders in the world” assume very very little risk. They swing accounts that may include figures of a billion dollars. so 10% of 1,000,000,000 is 100 Million dollars. As a small speculator, you assume more risk for more returns. The actual professional traders dont actually trade… they more so “front run” prices. So a comparison of the two is not exactly apples to apples.

4

Hey Bud, forget what everyone else is doing. Evidently, alot are not successfull, if you go by the 95% statue quo.

But why is that? Thats what you need to ask yourself, or find out why that is…

If you want faster results, you have to find the swagger to do so…

Whats your system like? How many pips do you average a day? What kind of time do you have to invest, to watch the action?

FORGET WHAT OTHERS ARE DOING, OR HAVE DONE, THATS LIKE A LAGGING INDICATOR, ITS IN THE PAST,

The key is, FIND [B]YOUR[/B] STYLE, Master it, and creat YOUR own mathamaticle angle to this biz.

ALot of folks here or there, or any Forex forum you may go to, fail after 3-4 years, and blown up account, and will pourrrrrr, " YOU CANT DO IT", " Thats Impossible", " Waaay to much risk", " Dont worry about 25 loses in a row", LOL…

Learn to WIN, and the rest will come to fruitation.

O, and just so you know, Im one of the Rouge traders here, still using fake demo account… So, as of right now, I cant give you more then a Half-A$$ answer, because Im really NOT trading, because demo accounts arent real action…

Now, with that said, I make 5% a day, average, but Friday was good, 23% just for Friday, isnt to bad…

2% BWAAAAAHAHAHAHA, NOT, i mean, sure , go ahead, its the safe way to trade, but I myself dont have 7-10 years at 1% a week, or month…

IF you make more then 10% a YEAR, its concidered to good to be true. But I feel thats a skewed number… Thats basicly the industry standard for a great money manager…

Find your swagger, THEN, crunch YOUR numbers…

Great Profits to ya,

5

I can agree with [B]nevergiveupss[/B] that 1-3% per week its ok. I can say that usually i try to do about 8-12% per month, and if it success i think i’m do my work excellent. So having 5K, you can earn $150 with low risks

6

Hmmm, I struggle to believe that the third point is true (The best traders in the world do not earn more than 10 % per year).

If you are risking 2% a trade, and you only take trades of 2:1 risk to reward (e.g. 40 pip potential win / 20 pip stop loss), that would mean that it would take less than just 3 winning trades to get a 10% return… 3 trades in a year… Sounds heavily understated to me.

7

Hello.

I’ve ‘skimmed over’ the replies to the thread starter (no offense to anyone).

With a $5 000 ‘starter’: with the ‘right’ trading system and NOT trading Spot FOREX then yes it IS possible to ‘become rich’ but NOT overnight no. But over TIME??? Most definitely. Although you APPEAR to have an ‘issue’ with risk / money management. Break THAT rule: well then you may as well send me the $$$. And my account details are …

Regards,

Dale.

8

I believe 10% is just a " Be SUre" thing… Those guys have ALOTTTTTT of investors, and most people are estatic with 10% a year… JUST 1 MESS UP, cant throw the whole thing out of whack… So, the general rule of thumb, is Find what you can do consistnatly, then cut that in half, to create a SURE situation…

Simply because its Human nature, and Just the way it is, Most systems fail without adapting to the situation at hand…
So, really, your not looking to take $5000 and just sit on it cranking out 1% a month, or evey 35 days, or whatever…

Now depending on your system, IF your downdraw is crazy on ANY of your trades, it was a horrible entry. Go back to the drawing board… Figure it out…

Downdraw, to me, means, each pip it goes in the oppisite direction, the more the system is disfunctional…

For instance, I trade about 65% risk of balance, PER TRADE, far cry from 2%, lol… But I dont allow my entry to enter ANY DOWNDRAW, But Im a scalper, ( high frequency trader) and snipe the market. If i go short, and my trade for some reason goes the other way, Im out… I wont allow it to backstep more then 5 pips… If it does, I made bad entry… But I also never loss more then 1 trade in a row. Thats unexceptable to me… If I do, Then My head isnt right, and need to step away…

Like I said, I dont trade like everyone here, Im the Mad Scalper, with Swagger, I want paid.

The bottom line is this… If you have downdraw issues, your system has holes, or YOU have bad trading traits. If your confident with your call, dont leave your billfold at home, throw the farm at it.

9

Dale, sometimes I think you forget where you are… how old are you again?? lol

10

Something else I want to add to this, since its on my mind.

To get to the next level, you need to pay yourself. You ever have that job, that you hated, or was really bored with, but once you finally got paid, and had something in your hand to say, " It paid Off", Well, the same is true in this Biz.

Now, the market has potentcial to make you wealthy, buy yourself a throphy… Wheather its a house, a car, a hat, you must have something that says, " Im making it Happen"…

Even bills or a debt payed off… The object is to get something accomplished on the Home Front, kinda like the " 1 Dollar Bill" framed on the wall…

So, what Im saying in a sense, is, dont keep all your eggs in the basket all the time… You need to pay yourself…

OK, sorry for the windup

11

A LOT older than I should be let me tell you!!!

You and I have had only ONE ‘altercation’ (which, as you hopefully know, I ‘kissed and made up’ with the person that I offended at time, and I know I WAS TOTALLY ‘out of line’ at the time and I remember your comments made and, as much as I hate to admit it, you were right at the time).

And you and I go ‘back aways’ too. So believe me when I say this is not ‘directed’ at you.

I MYSELF (REALLY) want to ACTUALLY MEET somebody who makes money trading Spot FOREX. And I’m not talking here about ‘stats’ or anything like that. I’m talking about meeting somebody IN REAL LIFE that makes a LIVING trading Spot FOREX and has the fancy cars and the homes etc. with NO credit or loans at all. The DAY that THAT happens: I’ll change my ‘stance’. But until then??? That is my ‘story’ and I’m ‘sticking to it’.

And anybody can ‘flame’ me for this post. It’s my opinion based on what I SEE and what I KNOW.

The reason I ‘hang out’ here is, as I’ve noted before several MAJESTIC times, is because this is where I ‘started out’. It’s my ‘home’ let’s say. I’ve made very many GENUINE and WORTHWHILE ‘cyber friends’ here (and that includes YOU AND JESSICA of course although ‘the little cow err… BUBBA’ STILL has not accepted my ‘Friend Request’ but be that as it may). That’s why I’m here. I should be putting my time and effort into MY forums which are ‘directed’ at trading Equities and Commodities but I don’t seem to be able to ‘stay away’. I’m sorry to say BUT: ‘the odds’ (and that choice of words in and of itself speaks VOLUMES and no pun intended either) are ‘stacked against you’ from you very first Spot FOREX trade. And yes: I JUST KNOW ‘it is coming’. i.e. the ‘flaming’ that ‘just because YOU, Dale, couldn’t cut it as a Spot FOREX trader you have no business saying what you’re saying’. I KNOW it’s coming. But the UNFORTUNATE part is this: I CARE!!! I REALLY DO CARE about new ‘wanna get rich quick’ traders. I CARE about them. I KNOW what the ‘lure’ is. I KNOW it’s ‘exciting’. But I can tell you: I don’t ‘buy it’ (and NO this type of sh*t doesn’t ‘go down well’ with my ‘employer’ but I CARE MORE about the poor bastards that are ‘lured’ to ‘the promise of quick riches’ using 50 000:1 leverage and that’s coming from someone who REALLY believes works for, and trades with, an honest and reliable broker i.e. that’s the ‘best that you can get’ without having to STILL worry about what your broker is, or is not, doing to ‘assist’ you in losing your money). ‘Bucketshops’ or not CANNOT ‘manipulate’ the Dow or the S&P 500 or the NASDAQ (not the mention ETFs and the other major stock indices). The difference??? You need REAL MONEY to trade the indices. In other words: you CANNOT be under capitalised. With Spot FOREX: THAT is the ‘attraction’. Bottom line: ‘if you cannot pay then you should not be playing’. Just take a LOOK at some of the titles of these threads???

Sorry: but given what I’ve lost because of this business I feel REALLY strongly about this. But you know what??? I’m willing to bet that no sooner has some new trader read this post of mine and they’ll go and open a Spot FOREX trading account. So be it. I do what I can. But that is EXACTLY WHY Spot FOREX brokers make the money that they do. It really doesn’t matter WHO says WHAT: ‘the human factor’ is what ‘makes the money’ for the brokers (and that’s coming from an HONEST broker).

Anyway and as I said: the above is NOT IN ANY WAY ‘directed’ at you. But it’s at very least ‘something to think about’ for others (I HOPE ANYWAY).

Regards,

Dale.

12

Hm. I’m not going to respond with a speculative answer, a response regarding expectation, or about the fallacy of information that is pervasive in the financial community. I’m just going to respond with a list of examples of a few people who have made more than 10% in a year:

Warren Buffett - over $50 billion from the markets - average ROI approx. 20% per year for 50+ years
George Soros - multi billion dollar profit - average ROI approx 22% per year for 35+ years
The following is a list of people interviewed in the market wizards books, and some of their accomplishments:

Randy McKay - ran $2000 up to $70,000 in his first 7 months trading, and then went on to build a personal fortune of
approx. 15 million in 14 years, and in 20 years, only had 2 very small losing years. at the time of the interview, his personal
net worth was approx. 100 million + in 1992.

Bill Eckerhardt - using mechanical systems, averaged a 60% return from 1978 - 1992…the year of the interview.

Monroe Trout - averaged a 67% return from 1984 - 1992, never having more than an 8% drawdown at any time EVER, and
only had a couple losing months…never a losing quarter or year.

Al Weiss - from his trading in 1982 - 1991, a 9 year period… a $1,000 investment would have been worth over $50,000

Stanley Drukenmiller - averaged a 30%+ return for over a decade trading multibillion dollar accounts

Gil Blake - who using a fund timing strategy and statistically determined outcomes has acheived over a decade of
making 20%+ ROI per year… and has a 95%+ chance to do that EVERY year… statistically speaking

Marty Schwartz - for the 7 years prior to the interview, averaged a 25% ROI MONTHLY… this is 1,400% per year,
for 7 straight years trading primarily stock index futures and options.

Ed Seykota - who has a highly mechanical approach acheived a 250,000% ROI over a 16 year period. THat’s right…
it’s not a typo. two hundered and fifty thousand percent ROI in 16 years.

Richard Dennis - who started trading in chicago with a $400 grubstake, and in less than 20 years, ran it up to over
one hundered million dollars.

Gary Bendtfield - who starting from home, with nothing more than a telephone, a newspaper, and a dream, took $1,000,
and over 25 years, grew to be the single largest Bond trader in the world - trading positions measured in thousands
of contracts. FYI - his “average” risk amount per trade is 1 point. A one point move on a single contract is worth $1000. Gary Bendtfield trades positions measured in the thousands of contracts. Gary Bendtfield’s average risk per trade is approx. $100,000 now. His average target is anywhere from 2 points or more.

Tom Baldwin - who in 1982 took $25,000, started trading t-bond’s, and made over $1,000,000 his FIRST year. after 6 years of trading, a very conservative estimate would put his net worth at over $30 million.

Now, traders I know not in market wizards or in the public eye in any way, yet who do better than 10% per year -

over a dozen home based retail traders…half of which regularly gross 100% ROI’s per year. I will not mention real names
or even screen names because I do not know if they would want this publically known, but many are participants on this very website.

Myself - who, after approx. 6 months of trading full time, had a return in excess of 120% my best month.

I’ve also started a little “project account” with $1,000 in the last week of october, 2011. After 3 months (2 of which were not traded due to the holidays) I am up approx. 10%, with an average risk per trade of 0.3%. Had I risked 1% on each trade, my account would be up over 30% in 3 months. You can see this progess here:

http://forums.babypips.com/newbie-island/41466-how-start-100-turn-into-1-million-100-trading-days.html

There are others who have public track records verified by an independent 3rd party company, myfxbook.com
some of note are here:

PAMM asta_uni_02 System | Myfxbook - over 100% ROI in 4 months

Ian Bezek System | Myfxbook - over 100% ROI since august 2011

Asset management System | Myfxbook - over 500% ROI since 2009

Also, I recently have started a to keep a more formal “public record” of my trading. I trade this public account exactly
as I trade my own personal, primary forex account. you can see the progess here:

XSquaredTrading System | Myfxbook - over 10% ROI in 7 days of trading

And as for my own trading… I average well over 10% ROI per month, and have for approx. 2 years. In 2011, I
had no losing months, and didn’t ever risk more than 2% of my trading capital on any trade.

I went “full time” with an account of less then $10,000. At the time, this was my entire net worth. Since that time, I’ve
had outside investment of no more than $50,000. My net worth is now into the low 6 figures, I’ve returned a good portion of that outside investment back, and I take monthly withdrawals of my profits and put it in a bank account. If I had kept all the capital in my trading account, my net worth would likely be much greater than it is now. But what can I say…i’m just an ultra-conservative money-in-the-bank kinda guy.

I could easily quadruple the length of this list… but I think the point has likly been made.

Whatever you’ve heard about 10% a year being a very good… in the world of professional, independent trading, or even in the world of top hedge fund management… that number is completely and utterly false.

80% of mutual funds don’t achieve greater than a 10% ROI. over 85% of home based independent traders lose money.
Well… so what.

80% of Snails in the world cannot move faster than 10 M.P.H. but 100% of cheetas can.

There are millions, probably billions, of snails in the world.

there are less than 13,000 cheetahs in the world.

So, you won’t find many cheetahs in the world. you’ll find lots of snails. just because someone (or even a lot of someones, including famous TV someones, animal show someones, and your pet store owner someone) told you that a snail that moves at 10 MPH is considered one of the fastest animals in the world, would just mean that these someones actually didn’t know anything worth listening to when it came to animal speeds… because frankly, a cheetah…albeit much more rare than a snail… does exist, numbers in the thousands, and is faster than anything on land.

So. the moral? Choose not to be a snail. Just choose to be a cheetah. And when the world says it isn’t possible…
just know they they are absolutly, positively, 100% unequivically wrong. period.

I mean… I said cheetah… not unicorn. Just because you haven’t seen one on your morning stroll doesn’t mean it
doesn’t exist.

Jay

13

Dale, no need to explain your position to me, I know what you’re about and why you’re here… I was just pokin’ fun :wink:

It is my personal belief that the profitability curve for retail forex traders is incredibly skewed. You’ve heard the saying “95% of retail traders lose money”. Well I’d take it further and estimate that 1% of retail forex traders make 90% of the available profits. This is excluding institutional players of course…

I have a very logical reason to believe that too. If you don’t “get it”, in terms of how this “game” is run, you will lose money… CONSISTENTLY. If you are privvy to how the game operates, you will Make money… consistently.

Now ask yourself… how LONG will the losing player stay in the game? Til the money runs out (or the ego’s battery alternatively) and that is a FINITE number.

but how long will the consistently [U]winning[/U] player stay in the game? INDEFINITELY

What happens to your account when you are winning for years and years?? It [B]compounds[/B]

So what you end up with is a very small fraction of retail players trading large accounts… and winning
and a very large fraction of retail players trading small accounts… and losing

Ta-da! :slight_smile:

14

Dale, although I personally make the vast majority of my income trading futures… I did for 6 months give or take make my living trading spot forex… and I’m working on a few side projects that, in the next 12-36 months should generate enough profit to live in the united states with at a middle class standard or better of living.

Tell ya what. If I ever get out to south africa (and I just may!) I’ll send you a PM, bring my laptop. You buy the beer and hook up the internet connection, and I’ll congratulate you…on meeting your very first sucessful retail spot forex trader :stuck_out_tongue:

Jay

P.S. I’m pretty sure simon templar trades spot… through an ECN is still spot (I think simon does that…but not sure) Anyway, hit him up.

See u in 2013 or later in S.A. for drinks! (just cuz this year, I have NO plans on visiting S.A.)

Jay

15

The main reasons why professional traders, working for institutions, ‘only’ make 10% per annum are given here by eremarket. While I don’t agree with each and every point he makes, I believe he is mainly correct.

And yes, you [B]can[/B] make some good money, starting out with 5,000 bucks.
If you generate 10% profit per month (which really is doable, as I’m sure everybody will agree), your 5k will grow to approx. 15,700 after a year (if you don’t withdraw and let compounding do its work). That is an ROI of more than 200% per annum, which is [B]damn good[/B].
Compounding these 15k again over a year, making an average of 10% per month, will see your account balance at 47k.
Do it yet again and you’ll be worth approx. 147,500 bucks.
So, you can make nearly 150 grand out of your 5, in three years, without taking undue risks (you can do that while never risking more than 2% of your equity at the same time) and without excessive expectations (10% a month is a high yield, but by no means unachievable).
I remember ClarkFX mentioning in this forum that he makes 8-10% per month, 15% or even a bit more in a really good month.

The ‘secret’ is to let your account build up for some time, making maximum use of coumpounding (which is the most powerful ‘leverage’ of all); then, pretty soon, your monthly 10% will equal a thousand bucks, five thousand bucks, and ten thousand bucks.
Start with 5k, use compounding for three years (or maybe it’ll take four, who cares?), and you’ll be able to withdraw your monthly 10% (which by that time equal 12,000 or 14,000 dollars) with a smile …
… or be greedy, wait another year or two, and then be able to withdraw 50k a month …
… which won’t make you a rich man, but which will guarantee you a comfortable life in a nice house, driving the car (or cars) you like and never having to worry how to send your kids to a good college while you enjoy a nice cruise around the world (on a non-Italian cruiseship, hehe).

So, if you spend a year or two on learning all you need to learn about forex and then spend another three to five years compounding your trade account (call it seven years in all), you’ll be able to make a good living, working six-hour-days in the comfort of your study or living room.
There aren’t too many jobs which will enable you to achieve this.

Cheers,
O.

16

After having published my above post, I’ve read what Jay (eremarket) had written before.
Q.E.D.

O.

17

Alright, well, two VERY important and meaningful ‘retorts’. That said: eremarket??? You’re just a damn ‘show off’ (and a good trader too)!!! LOL!!! I read your posts. So I KNOW you’re ‘on the level’. GEEZ: and just KNOWING how you are on a GOOD day Jay WHAT’S the bet that before reading THIS sentence (and the previous sentence of mine) you were ALMOST ‘pushed over the edge’!!! LOL!!!

akeikamai:

Well I appreciate your reply. To be honest: you have no idea how ‘that day’ has ‘plagued my mind’. And I’m not joking either. But that aside let me put it another way: it’s a LOT harder to ‘fuk up’ trading Equities and Commodities than it is to 'fuk up’ trading Spot FOREX at 1 000 000:1 leverage (the leverage gets bigger every time I ‘broach’ the subject)!!! LOL!!!

And put YET ANOTHER WAY: for experienced and DISCIPLINED traders then Spot FOREX is a ‘doddle’. But RIGHT THERE is your ‘top 5%’. It’s the ‘masses’ that get ‘drawn’ into this business through marketing, ‘promises of MEGA riches in a short space of time’, that bothers me. The likes of you and Jay and Clint (who I STILL think is not speaking to me) and Master Tang and PurplePatchForex (and there’s a FEW more traders that I can think of that are active here but it could become a ‘longish’ list BUT ‘out of proportion’ compared to all the new traders that come along). That’s where I’m coming from.

And Jay (as Dale ducks below his desk again while typing this): I don’t consider Warren Buffet or George Soros to be Spot FOREX traders. Warren Buffet is a ‘value investor’. George Soros is ONLY ‘infamous’ for ONE Spot FOREX trade. If it were not for that trade: quite possibly nobody would ever even have heard of him UNTIL he started INVESTING and not TRADING. As for the rest on your list??? I’ve never heard of 99.9% of them but I WILL look them up just for my own curiosity. Listen up: if I’m wrong then I’m wrong. But I DO believe that this business of Spot FOREX trading is NOT what it’s made out to be (second ONLY to Binary Options trading where the advertisements seem to get ‘worse’ every single day)!!! LOL!!!

But hey. As I’ve noted (and as others have ‘called me on’). I’ve never made money trading Spot FOREX. So maybe it’s ‘just me’. Maybe it’s not. I don’t know. But I REALLY find it a ‘stretch’ that one person (as in ‘me’) can be profitable trading Equities and Commodities and NOT profitable trading Spot FOREX given the SAME trader using the SAME broker trading the SAME trading systems. I’ve mentioned this so many times that I know by now it gets on everybody’s ‘tits’. But TO DATE: NOBODY has given me a REASONABLE explanation of how and why this is possible.

And the worst part??? I PERSONALLY feel like a ‘fraud’ KNOWING that I’m promoting something where the ‘odds’ are stacked 70% (in the case of my beloved broker it’s not QUITE as bad as the commonly quoted ‘95%’ at Deltastock) in favour of the broker. BUT: it IS JUST BECAUSE of HUMAN NATURE. So what does a person do??? ‘Go with the flow’ or ‘go broke (again)’???

Regards,

Dale.

18

Sorry. Just so that you all know. It took me an AGE to ‘compose’ my previous post so I’d not seen nor read the current posts.

Regards,

Dale.

19

Jesus wept!!! Here we go again with these ‘up market’ and ‘intelligent’ ‘abbreviations’ (sorry: I know THIS one i.e. ‘QED’ has been explained to me before but I forget now what it means). I’m just a ‘commoner’ you know!!!

Regards,

Dale.

20

Naaahhh.
Nothing wrong with promoting a perfectly legal and fair service, in my book.
Winning or losing in forex trading is a matter of personal mindset, even personal decision: you either treat it as a real business and prepare yourself accordingly (thus being part of the 5% or 10 or 30% whatever), or you see it as a game and gamble (thus being part of the losing majority, and thanks for the liquidity!).
’[I]You pays your money and you takes your chances[/I]’, as the gramatically incorrect yet very true adage goes.

O.