Growing Small Account

GROWING SMALL ACCOUNT ($50 case study)
One of the misconceptions beginner traders make is thinking they need huge capital to be
profitable in forex trading. Most of them start trading with account size lower than $100 and
blow the account couple weeks (or days) after funding, most of them keep funding hoping
without evaluating what they are doing wrong. Some even increase their capital hoping that
will make a difference, but most of the time same old story. The aim of this write up is to show
you theoretical (and practically) how to manage your small capital and scale to bigger one.
Special Note, it is assumed you have a working trading system with at least 40% win rate but
if you do not have a system yet you can check out the Forexlyfe Full Course or Trading Bible
to help in building your own personalized system.
Let get started, some of the reasons new traders blow their account includes but not limited to
the following,
 Inadequate understanding of position sizing (i.e. amount they will lose when trades go
against them)
 Risking Randomly (giving preference to particular setup)
 Trading Volatile Instruments
 Randomly Jumping on every instruments
 Not having a personalized strategy
Now let us take them one at a time, for the first point most beginner trader don’t really know
the amount they are risking on a trade before opening the position until the loss is realized.
Some even assume that 0.01 Lot size means 1% of the capital (Lol.).
Here is a quick breakdown, for beginner traders it is often advice to risk 1% of your capital but
the problem with this is that your account size is small ($50), 1% of $50 is $0.5 with which
you cannot even open 0.01Lot size position sticking to risk. The image below was excerpted
from myfxbook.com position size tool. It has 6 rows showing currency pair (this is where you
input the currency pair you want to trade, in this case it is EURUSD), account currency (this is
where you input the currency of your account, in this case it is USD), account size (this is
where you input your account size, in this case it is 50), risk ratio % (this is the % of your
capital you want to risk in this case it is 1%) and trade size (leave this row constant at 1 standard
lot size). After inputting all the necessary details you then click on the calculate icon. From the
result displayed you can see clearly that if we want to risk $0.5 with 20pip stop loss on
EURUSD the lot size to use is 0 (i.e. it is not possible)
Fig. 1: risking 1% of $50
Even if you increase the risk percent to 2% with SL of 25pips you will still arrive at lot size of
0 (also not possible). But why? What most beginner traders don’t comprehend is that your lot
size is affected by 3 things (your SL size, currency pair you want to trade and the amount you
want to risk). The higher your stop loss, the lower your lot size.
The best way to approach this is to risk a fixed dollar range per trade (say $2 to $3 per trade)
with average SL of 15/25 pips you can achieve that.

Risking randomly (giving preference to particular setup): Another growth dragging
mistake that non profitable traders do is risking randomly and trying to give preference to
particular setup because an Instagram guru or trader they respected posted it. In forex, we are
playing the game of numbers, risk management and probability, for the fact that a well-
respected trader posted a setup does not mean he is right or wrong because he does not have
control of what the market will do, he just speculated based on his edges in the market. So you
want to adhere to proper risk management at all-time regardless of the trade setup because
anything can happen any time.
Trading Volatile or Exotic Pairs: Lot of beginner traders fall victim of this particular one,
imagine trading Gold or US30 on a $50 account lol. Most of these traders are just starting up
without solid personalized trading system, they may start by risking 0.01 Lot size on Gold and
if they are lucky they flip the account to times 3, then after couple winnings they feel they have
arrived and triple their risk until the whole account is wipe-out during the losing streaks of their
edge (All trading edges have losing streaks and it is how you manage your risk during this
period that will determine if your account will survive). So, for now it is advisable to stay off
volatile pairs until your account size and experience in the market is solid.
Randomly Jumping on every instruments: In order to grow small capital, you should focus
on one kill at a time i.e. one pair or position at a time. The mistake most beginner traders make
is trying to jump impulsively on every single trading opportunities. They believe trading more
gives more money but in reality less is more.
Not having a personalized strategy: most traders fall victim of this, not having a strategy or
trading that suit just you (i.e. personalized just for you). You have to be sincere with yourself
in trading otherwise, you won’t see any form of growth. Personally I love instant gratification,
hence one of the reasons most of my trades are intraday. You know yourself better. Click the
link below to download sample of my Trading Plan .
Use the link below to see the account I grew from $50 to about $720
50 to 720 Account

Growing Small Account

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GROWING SMALL ACCOUNT ($50 case study)

to help in building your own personalized system.

 Risking Randomly (giving preference to particular setup)

 Trading Volatile Instruments

 Randomly Jumping on every instruments

 Not having a personalized strategy

EURUSD the lot size to use is 0 (i.e. it is not possible)

Fig. 1: risking 1% of $50

with average SL of 15/25 pips you can achieve that.

anything can happen any time.

gives more money but in reality less is more.

link below to download sample of my Trading Plan .

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