How to manage your trading account be it small or big!
1) Lets play a game of flipping coins. Take out a coin now and flip it 10 times. The results not consistence. It can be 3 times head and 7 times tail or vice versa. It can also be 10 times head and 0 times tail, or any combinations of 10.
Now lets keep flipping the coins to 100,000 or even more. Some one did this flipping some times ago.The results, very close to 51%, (52%) over 49% (48%). Casino took advantage of this discovery.
Then, by applying the Risk / Rewards of 1:3 Eg, Stop Lost (10 pips) Profits (30 pips). By applying this formula, even if you just win 3 trades out of 10, you still having a draw on the 10 trades you took. 3 x 3 = 9 (win) 1 x 7 = 7 (lose).
Now keep taking your trade on your next 10 trades, 20, 30, 100,.... 2000 trades. By taking that much trades, hopefully you will gain more experiences and just say now you manage to improve your percentage of win over lose around 48% to 52%, You already start consistently making money from forex.
No matter how small or how big your trading account is, its very important to have a proper money management. A lots of new trader making the same mistakes when they started out trading.
I want to make USD100,000 with out first knowing how to read the chart, psychology of tradings, etc . Its should be, will my trading account able to survive me, until i can consistently every month making money from forex.
I would advice you to divide the capital you have by 33 times. Which mean you will only risking 3% of your trading account. Then look for the trade that is within 50 pips of stop lost.
Eg, if you only have USD1,000 after divided it 33 times. You can only afford to lose USD33 for every trade you take. Then after divided it by 50 pips, which is 0.66 Its means your volume is 0.66, Stop Lost(within 50 pips) from your entry price, and try to look for trades that can give you 3X the profits from risk.
After every 33 trades that you have traded, divide your capital again (+) gain or (-) drawdown. Now adjust your volume according to your new capital.
2) And so how i am going to achieve my USD 1 Million goal in 18 months. Lets say i manage to double up my account every month.
Lets do some calculation.
- First month from USD42.24 to USD 84.48
- Second months ... to USD168.96
- 3'rd ...USD 337.92
- 4'th ...USD 675.84
- 5'th ... USD 1351.68
....... Until the 15'th month, My trading account would have accumulated up to USD 1,384,120.32 which is over 1 million dollar.
Wow, sounds achievable.. That's all for now. Happy Trading.
Best Regards,
Victor Lew.
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