A recent poll of retail forex traders found that over 3/4 of the respondents opened and maintained their forex accounts with less than $5000 with most having between $1000-$2000. That is absolutely in line with my experience of talking to traders from around the world for the last 20 years so it seems only natural that we spend some time answering the questions that come up from traders wondering if this is enough to get started on the journey to becoming a successful FX trader.
The question is simply:
Can I grow a small account to a big account?
The simple answer is yes! You can! It’s been done many times before by many people I know (including myself) and it’s one of the most rewarding experiences a trader can have. Those that do it know that it was their training ground, their boot camp into the world of being a successful trader and would never trade the experience for anything.
But the complicated answer is yes… IF
IF you learn risk management
IF you learn about trade sizes
IF you have patience
IF you have discipline
IF you have the timetable to do it
IF…
So many ifs.
Let’s jump into a few of the basic necessities of growing a small account.
First, growing a small account to a big account takes time. So much of the hype around trading, the fast cars and big houses and stacks of cash we see advertised on social media don’t accurately reflect the time and dedication that real traders have put into developing their skills and the time that it takes to consistently grow anything much less a trading account.
Giving a trading account time to grow means that a trader has to be patient. Patient with the market by not chasing every move that comes along every day in a chaotic and frantic attempt to make money. Patient with what seems to be immediately meaningless in terms of money made on any given trade and be able to see that over time, those wins add up big time.
This is very closely related to the idea of delayed gratification. Great traders can delay their rewards, losing traders need things to happen right now. The price must move in my direction right now and my account must be much bigger tomorrow than it is today. This seems to be a cultural phenomenon. We want to order our coffee or cheeseburger at a little speaker box and then expect it to be ready by the time we pull around the corner. We want to stream every movie ever made at the click of a button. We want our meals delivered to our door!
Growing a small account forces a trader to stop looking at the results and focus on the process. This is discipline. This is where the roots of a trader are grown because the process in trading is no different to making $1 than it is to make $10,000. The problem comes in when the trader focuses on the $1 and “feels” like it’s not enough. It was not enough that the process was good enough to make the $1 it was that the $1 was not meaningful enough. I mean you can find a dollar on the street right? But the missed revelation of potential greatness is in the process that made that $1. That process, if given enough time, can make an unlimited amount of money.
Here are the basic steps to growing a small account:
- Find a system that works- You can spend the time to create it on your own or buy someone’s existing system. It doesn’t really matter which way you choose, although there’s something about putting the time and energy into building something that makes you feel more invested in its outcome.
- Trade demo- Nobody likes practice. Sports players, musicians or traders. I get it. But not a single person becomes great without meaningful practice. This goes back to the process discussion from earlier. You will never even make the $1 trading demo but you can develop a skill that will make you unlimited money in the future. Commit to the practice before you play!
- Trade your small account- Take the exact same trades that you worked on in your demo account. Practice the discipline of repetition and developing a real trading routine. DO NOT pay attention to your p&l. It’s so easy to get emotionally involved and look at your account after one week of trading micros and see $4.87 gain and question your entire existence. This trading is not about the money. It’s about the process. Submit to it and you will be the trader you dream about being. You just have to give it time…
And finally, to grow a small account to a big one, you have to love the profession of trading. It has to be something that wakes you up in the morning and keeps you up at night (not because you overleveraged and are losing bad). The best traders I know have an unending desire to better themselves in the markets. Learn new things. Test new ideas. Work on their emotional and mental growth because trading is 99% a mental game. It consumes their life. Not because they want the money. Wanting money rarely pushes traders to be successful. There are easier ways to make that $1. But loving the game, and then wanting to pass that knowledge along to others, that’s what drives them.
Can you grow a small account to a large account? Absolutely. And I hope you have a blast doing it.