For those of you who want to witness the true power of trading forex then this is what a compounding account can do for you!! Compound interest means the interest paid on both the original principal and on the accumulated past interest.
Using what's commonly termed a "fixed fractional" trade sizing system, a consistently successful trading strategy can become exponentially successful. Let's say you have a trading system that brings in $20 per trade when you first get started. Over the next 1000 trades, if you keep risking the same amounts as when you first started, you'll make $20,000. However, if you increase the amounts you're trading proportionally to the increase in your account balance, you'll make substantially more.
If you started with $1000, let's say you double that to $2000 after 50 trades. Using the fixed fractional system, you now double your trade sizes, and as a result are making $40/trade - and you're maintaining the same level of risk, since you're continuing to trade with a "fixed fraction" of your total funds. After another 50 trades you've doubled your account size again, to $4000. Time to double your trade size again - so now you're making $80 a trade.
- Choose a good forex broker
- Trade in at least 2 forex accounts.
- Trade with news guidance
- Set daily target only 10 or 15 pips.
- Intraday trading only
- 5% maximum risk
- When target 10 - 15 pips is reached, close all trades position or order
- Do not withdraw, stay compounding
Here is other examples of starting balance $10,000 compounded monthly at different rates.
- Month 12, risk 5% : 17,958.56
- Month 12, risk 10% : 31,384.28
- Month 24, risk 5% : 32,251.00
- Month 24, risk 10% : 98,497.33
- Month 48, risk 5% : 104,012.70
- Month 48, risk 10% : 970,172.34
- Month 48, risk 15% : 8,194,007.12