Can you really make money with a small Forex account? (PART 1)
In this weekly video:
00:23 – Trading with a small Forex account
01:06 – Can I make money successfully?
01:30 – Why do so many people lose money?
02:30 – Keeping it simple is usually the best way to trade
03:18 – Learn how to trade first
04:35 – The size of your trading account right now is irrelevant
05:10 – Invest in yourself
05:32 – Excellent trades taken live for good account gain
07:34 – Next week’s video and how you can profit from the Forex market
Can you really make money with a small Forex account? Let's talk about that and more, right now.
Hi, traders. Andrew Mitchem here, the owner of The Forex Trading Coach, with video and podcast number 294.
I want to talk all about trading on a small Forex account, and can you make it as a small-time Forex trader?
Trading with a small Forex account
Now, I made a video along a similar subject line around two years ago, and it's had an enormous amount of hits on YouTube. It's had about 108,000 views, and lots and lots of comments, so I thought what I'd do is I'd split that subject up into more detail and cover it over this video and podcast, and also next week's video and podcast. Why? Well, it's obviously a very important subject, with so many people wanting to find out more about it, but it's also quite a large subject, so probably more than just one episode.
So let's start at the very beginning. With a small account, people want to know, can I make money successfully? Now, the answer is yes. The problem is, most people don't know how to do that.
Can I make money successfully?
And I say the answer is yes, and I'm saying that with confidence due to my experience. I've been trading Forex for 15 years full-time, been teaching for almost 10 years. But the problem is, is as you know, and as I've repeated many times, the stats out there tell you somewhere between 90-95% of all Forex traders lose money, and that's probably absolutely true.
Why do so many people lose money?
Now, there's a huge number of reasons for that and we'll cover the reasons now, and then on the next episode we'll cover how you can overcome those.
But some of the reasons, and in no particular order, would be, really, a lack of strategy, a lack of understanding of the market, a lack of understanding of good money management, a lack of discipline as a person, a lack of understanding of what type of trader you are or wish to be. Are you a technical trader, or a fundamental trader, or a bit of both? What timeframe charts do you like? Where are you going to put your stop loss? Where's your profit target? What type of trades are you taking? Are you going to take reversal trades, continuation? Are you using indicators? Are you using no indicators? Are you using just price action? Are you going to trade just before the news? Just after the news? What is it that you're going to do?
The problem is, is that unfortunately, most people don't know their own answers to that. I can tell you, in all honesty, with many years of practical experience, keeping it simple, like the KISS approach, is generally the best one. So you don't need to have lots and lots of strategies.
Keeping it simple is usually the best way to trade
You don't need to have lots and lots of indicators and lines all over your charts. Now, some people say to me, “Hey, Andrew, why are you saying that when your charts behind here look really complicated?” Well, the fact is that they're not. I have some clever software that alerts me, alerts my eye to certain candle shapes that I'm looking at, and then I mostly use horizontal support resistance lines, pivot points, and then I've got a couple of other indicators that come lower down in my priority, to add some confirmation. So you don't need to clutter your charts, and that's what works for me and works for my clients.
So coming back to the reality of it, can you make money? Well, yes, you can, but the important thing is, is that for right now, as a small-time Forex trader, it's important for you to learn how to trade.
Learn how to trade first
You see, without that, the size of your account and how much you're going to make, and can you give up your job, and can you have massive passive income and retire, and all that type of stuff, really, quite honestly, does not matter, because without understanding how to trade and how to make money as a small-time Forex trader, the rest of it's irrelevant.
Now, there's lots of ways you can grow your account. There's many ways. You can add funds to your account from your own income or your own source of income, whether it be selling property, whatever it might be, but you can add and grow your account. You can make money from your trading and grow your account that way. You can get outside sources, such as you can sell signals. You could trade for other people who are small-time, family people, or friends, et cetera, and gain a commission that way. So there's lots of ways that you can grow your own account, but it still comes back to the fact you need to know how to trade, because for some people, $10,000 might be an enormous amount of money. For other people, $10,000 might be just play money. So the actual size of your account right now is almost quite irrelevant.
The size of your trading account right now is irrelevant
I get people coming to me, saying, “Hey, Andrew. Look, I can't really afford to join your course because my account's only $1,000 or $500, yet your course is $2,000. It's just, I can't afford it. I can't justify it.” My answer is, “Well, that's your call. That's your opinion.” But the thing is, is that how long are you going to go on trading that thousand or $500 account, losing money and then open another thousand or $500 account, and then another one, and then get frustrated, then give up? Or are you, really when you think about it, best off to say, “Well, I'm going to invest in me.
Invest in yourself
I'm going to invest in my education, and my knowledge, and my time, with the help of someone, and actually make sure that I can learn how to trade that thousand-dollar account because that's the most important thing, learning how to trade”? It comes back to that so many times.
I'll give you some examples. I held a live webinar, just last night, for my clients in the European session. I took three trades, live on that session, two on the one-hour charts, one on the 15-minute charts.
Excellent trades taken live for good account gain
Two of the trades hit profit and one got stopped out, and so with those three trades combined, with the two wins and the one loss, with 0.5% risk per trade, I and people who copied me made a 1.4% gain, just from those three quick trades on a live webinar. 1.4%. That's pretty good when you consider most interest rates in savings around the world, on most standard banks accounts, are probably somewhere between about, probably less than one and maybe three or four percent, tops, depending on where you go round the world. We just made 1.4% on three simple trades last night.
Now, on that session also, I had two amazing bits of feedback from clients. A guy called Zhasee, he's over in the Middle East, and he made a 6.9:one reward to risk trade on the Euro/US dollar, and that meant he had a 3.45% account gain, just from that one trade. We also had a typed-in comment from a guy called Colin, not actually sure where Colin's from without looking it up, but Colin made a 7.7:1 reward to risk trade on the British pound/Canadian dollar four-hour chart. Now, that ended up being a 3.85% account gain with 0.5% risk. So you've got one guy making 3.45% and the other making 3.85, just on one trade each, with only minimal risk, only half of 1%. You might want to go, “Well, Andrew, that's too small for me. I might want to risk 1%.” Well, therefore, the guys just made 6.9% and 7.7% on just a trade each. They're not going to be doing that on every single trade, of course they're not, but it just shows what can be achieved.
So, look, that's the first video around the subject, more about the general information.
Next week’s video and how you can profit from the Forex market
On next week's video and podcast I'm going to get into more detail about how you can profit from the Forex market as a small-time Forex trader, with some really good, real-life, practical examples to share with you. So look out for that, this time next week.
This is Andrew Mitchem, The Forex Trading Coach. I'll see you on that video next week. Have a great weekend. See you then, bye.