In this article we would like to discuss some questions concerning operations with forex trading accounts. Please, keep in mind that those who didn’t read my books just tell me what they are working at right now. Somebody continues to read my books but they come to me with already prepared plans. When I show them our plans of business usually they don’t like it. They are fully rapt with certain trading wish and just want to know when they can leave their work places to live only on account of trade.
Why does it happen like this? They can look at things realistically. If you try to get support to the first supposition so it’s more likely to see the facts that support it. However, if you are ready to change your points of view on something that will break your dreams and illusions, we are on the right way.
Let’s return to our example. Let’s imagine our trader, called John makes 48.000$ per a year working at the office. He wants to change it on monthly income within 4.000$ by trading in two ES-mini contracts. Let’s also imagine that he can find three transactions per day using the same capital more than once. What does it mean? What should happen that John’s dream comes true and he became forex trading broker?
Say John has 300$ of marginal provision for one contract. Let’s also look at some levels of income to avoid any illusions.
The best trades can make 20%, 30%, sometimes even 40% per year. The most important thing for them is sequence i.e. possibility to repeat it from year to year. If you can do 30% and more per year, you are an outstanding trader. If you can do it over several decades, I suppose, all books of investment and forex trading books will write about you.
Probably, operating with small accounts and would be more successful for you while well-known traders working with the huge sums in time when market influence is minimized. Now, let’s look how does it correspond to "mini-plan".
If John does three transactions per day and trades twenty days in a month, on the average he will do sixty transactions, trading in two contracts. He wishes to do 4.000$ per month. To achieve it, he should do approximately 33$ on a transaction (without taking into consideration commission, currency exchange rate, slipping and other costs). At first sight, it sounds rather easily – profit in the amount of 33$ on the transaction or on the average two third of point.
However, let's look what it means. Let’s take two variants. The first is absolutely unrealistic, but it should be considered as an example. Imagine, John has on his account only demanded marginal supporting in 300$ on one contract. It cannot wait even one peak of recession, but, nevertheless, let's continue consider this variant.
He’s going to do on an average 33$ on the transaction to receive 4.000$ per month, having only 600$ of trading capital! What profit will he receive only by drawing his profit from the account without taking into account ramp up of volumes on forex trading system? "Only" 666 % per month or 8.000% per year. If you come across «traders of illusions» it is familiar to you – “look”, only 33$ on one contract, and you will do 8.000 % per year. Just imagine if you trade about ten contracts!
