Compounding profits is the subject of this week's trading tip. How you can start with a relatively small amount of capital and grow your account into a sizable investment.
You don't have to start big
When starting to trade Forex, competition between brokers for your trading dollars has made it easy for you to get going. You can now choose between standard, mini, micro and nano accounts.
These accounts can be opened with as little as $25, but don't expect to be able to quit your job soon with that size of account.
However, don't give up just yet... I'm going to show you how even a very small initial deposit can build into something very worthwhile.
The power of compounding
This example shows how you can safely trade your smaller account and grow it into a major one, using steady growth and the power of compounding.
The calculation assumes the following criteria...
- $250 starting amount
- 5% profit per week
- all profits are left in the account
As you can see, even a $250 account can grow with only modest gains. The key here is to compound your profits.
If you can develop a trading system, or find an EA that will return 5% per week, you can grow a $250 account into one with a value of over $3,000 in only one year.
Is it worth the effort? You know it is.
At the end of year two, this account is worth $39,960 and earns $1,903 each week. Don't give up!
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