Too many times have I seen low effort websites and inexperienced traders offer insane returns on small investments. They abuse the “unlimited potential” of the foreign markets to lure beginners into believing that large sums of money are easily obtainable. They trick you into thinking that there is a secret, or even that the markets are flawed, and that you could exploit such flaws.
It is imperative that you do not trust anyone who promises you returns that you find hard to believe. The good old saying still stands: if it sounds too good to be true, it probably is.
If you are looking to make relatively significant amounts of money without losing your shirt, there are two ways to go about it (taking into consideration that you have an edge and that you will be respecting all your trading parameters). You will either need to take big risks with a small account, or make smaller but more consistent returns on a big account (percentage wise).
Starting Small And Aiming For The Sky
If you are an experienced trader, it is possible to take a small account (I would consider a $500 account to be small) and turn it into a much bigger account in a short amount of time. What you will need to do is risk a big portion of your capital every trade, and increase your position size after every win.
For example, you could risk 10% of your account every trade. For your first trade, you would be risking $50. If you won, you would now be risking 10% of $550, and so on. With a risk/reward ratio of 1 for 1, you could almost double your account size in 7 straight winning trades. After reaching a certain account size, you could decide to turn down your risk to 5%, in order to increase the stability of your income. With this kind of strategy, you should be ready to lose all the money you’ve put into your account, but could possibly make big returns.
As you’ve seen from the previous example, it is quite risky and involves some luck to simply double your account of $500 in a short time. Imagine how hard and unlikely turning $500 into $30K is. Yet, some “mentors” will try to tell you that it can be done with very little effort.
Transforming Big Into Bigger
Another way of producing significant results with less risk is by investing a lot of capital into your account. By opening an account with $20K, you can afford to risk a very small percentage of your account and make significant gains. If you are looking for a relatively stable source of income, you could aim for returns of 3-10% every month and steadily compound your position size. This may not sound like great returns, but it would be very possible to turn a $20K account into $100K in less than five years.
Being Unrealistic Will Be Costly
You have to keep in mind that most people who earn a living by trading have had previous jobs and put aside a good sum of money in order to produce sufficient returns without the stress of risking their portfolio on a few trades. It is also very common that they sell some sort of coaching or mentoring package for new traders.
If you are looking to make a lot of money with a little bit of money, you are beginning your trading journey with a very big handicap. If you are not open about changing your mindset, I suggest that you invest your money into an account managed by someone else. It will save you time, money and mental sanity.