Prepare to be disappointed…
I know, I know…some of you will be throwing your fists in the air telling me how wrong I am and I know that I might be shattering a few of your dreams, but hear me out..
There are millions of traders, all from different ends of life, all have different wants and needs…
So I cannot speak for everyone, but for those like me who want to use forex as a source of income, there is a bitter pill that we all must swallow first.
You. Cannot. Earn. Enough. To. Live. On. Using. A. Small. Account.
People, I am talking about a sustainable income here.
Let’s put this into a working example…
You are trading a £2,000 account in the hopes of making £2,000 a month to live off.
You’ll need to be making an ROI of 100% every single month just to live on from an account of that size. Is that realistic? No. Absolutely not.
You would also have to risk a lot more than 1 or 2% per trade to get a return of that scale. Even the best traders would struggle to make profits like these using higher risk consistently.
Furthermore, a higher win to loss ratio would be necessary to prevent your initial balance from dropping too low due to the additional risk the trader has taken.
Higher profit need + Low funds → Higher risk per trade → Higher profit/loss ratio → lower sustainability.
What does it mean if it isn’t sustainable? It means making a long term living from it is not possible.
So what should you do? I know you’ll be confused as to what you can do instead, especially if you lack the ability to be able to acquire enough funds that will enable you to trade for a living; after all, getting more money is easier said than done. There is good news though…
Can you guess what this stands for?
Other People’s Money!
Trading with OPM is the best possible option to trade large sums without having to risk too much of your hard-earned capital. There are many prop firms who offer opportunities like this. Examples are: The5%er’s (the firm I’m with), FTMO, Maverick, Funding talent- the list goes on. Many of these firms will allow you to trade large sums of their capital for a profit split. You will also have to pay admission fees and/or take their trials before they fund you money; all of this is far less risky than you trading with your own money as you are not liable for any losses on a funded account.
The worst that could happen is that you lose your admission fee and the account will more than likely be taken away from you, but you could always try again.
Using OPM will fast forward your trading career if you have already established an effective trading system, coupled with a sound risk and money-management plan.
Once you’ve done that, getting funded by a prop firm is your best option if you do not have a lot of capital at your disposal.
Don’t over-do it on small accounts, it will ultimately amount to nothing.
Instead, use them to fine-tune your risk/money management techniques and use demo accounts to practice trading methods that you’re learning.
Best of luck, happy trading and stay wild.