From time to time I receive emails asking ‘money’ questions like this:
*Is it really possible to make 6 figures inside 3 years from forex trading?
*Can the ‘man at home’ realistically expect to beat the top hedge funders who make around 30% return each year?
*If such big profits were possible wouldn’t we all be billionaires in the blink of an eye?
Now, I totally respect a healthy dose of scepticism.
I feel I have a lot in common with the understandably sceptical reader because hyped-up promises of instant riches from trading, or any other ‘easy’ way to make money, make me want to stick forks into my eyes.
That’s why I like to use the unquestionable might and power of mathematics to illuminate any profit-seeking venture I might be considering.
Take the question of 6 figures inside 3 years…
A trader kick off a trading campaign with £1,000 in his trading fund.
In week one he places five trades, each risking 2% (£20) of his account:
Trade 1: Loses -2% (-£20)
Trade 2: Loses -2% (-£20)
Trade 3: Wins +4% (+£40)
Trade 4: Loses -2% (-£20)
Trade 5: Wins +5% (+£50)
Net result for the week = +3% (+£30)
He throws his £30 profit back into the pot and kicks-off week 2 with £1030 in his trading bank…
Trade 6: Loses -2% (-£20.60)
Trade 7: Wins +4% (+£41.20)
Trade 8: Loses -2% (-£20.60)
Trade 9: Wins +5% (+£51.50)
Net result for the week = +5% (£51.50)
The £51.50 goes into the pot and week three opens with £1,081.50.
Here’s what happens in week 3…
Trade 10: Loses -2% (-£21.63)
Trade 11: Wins +2% (+£21.63)
Trade 12: Loses -2% (-£21.63)
Trade 13: Wins +3% (+£32.45)
Net result for the week = +1% (+£10.82)
The £10.82 winnings go into the pot and trading continues in the same fashion for week 4, week 5, and for as long as the trader wishes.
Now, as you’ll see from the example record of trades from these first 3 weeks, an average 3% return per week was achieved.
And believe it or not, a 3% average return, reinvested into the £1,000 starting bank, will have grown to £4,515 by the end of the year.
You’d be looking at £21,000 by the end of year 2.
And an eye-popping £97,671 by the end of year 3!
Would every week be a winning week? No, of course not. Some week will show a net loss. And other weeks will show bigger gains.
That’s why it’s important to keep a long-term overview of the campaign, and to keep tabs on the average performance
(This is what let’s you take the inevitable losing periods in your stride.)
But a robust strategy – one that embraces losing trades (!) as well as winners in order to achieve net positive results – is just the kind of strategy that will let you grow a small account, quickly.
You can be nimble with your smaller account, outperforming the hedge-funders and the unwieldy size of their funds.
And you can be aggressive as you like – no need to put an acceptably conservative ‘public face’ to your trades in order to attract investors.
Of course, things get interesting once your war chest has swollen and big cash numbers are suddenly involved…
A trade size of 2% of your £100k account means risking £2,000 per trade, maybe 4 or 5 times a week.
Would you be comfortable trading at this level? Maybe.
Or maybe you’d scale your size down to 1% per trade at this stage. And you’d perhaps start withdrawing regular lifestyle-funding payments from your account now.
You’d be wise to do so. And this is precisely why exponential compounded growth begins to level-out once big ‘real cash’ numbers are involved.
So I don’t know about this business of becoming a Billionaire in the blink of an eye. Can you imaging the psychological pressures of risking 7 figures per trade, multiple times per week?
No, me neither.
But getting that first flush of explosive growth under your belt, going from a small account of even £500 to a respectable lump in a year or two, that’s definitely right up my street.
And if you’d like to be part of an exclusive group of traders with this specific mission in mind – applying a proven and effective strategy for fast growth, and getting personal support every step of the way – then I have news you might find very interesting.
Keep an eye on your inbox and I’ll be telling you all about it very soon.