Does having adequate account size help make a success?

Hello Friends,
Especially Professionals.

Do you think having a good account balance helps alot in the long-run ?
Do you think its better to trade small with good account balance..
than rather trading huge with less account balance.

I would appreciate your advises.

Thanks.

In times of micro/nanolots and Oanda where you can trade entirely every size, account size doesn't matter.
Whats more important than the actual account size, is how much do you risk per trade in percentage (%).

Thats the only thing that matters. But remember the larger your account the larger are you profits.
Assuming you have a trading system with R/R = 1 and you take a risk of 2% per trade.

If you have an account of 200$, 2% equals to 4.00$, hm not that much.

But if your account is 50.000$ than 2% equals to 1000$ . Sounds much better, right?

And your question is a no-brainer if you think about it for a minute.

U have to understand what is ur main objective and goals first.
If ur a employed trader, lets say trading an account size of 2M, that's helpful, because if ur target is only to achieve 500k-1m per annum 25-50%. or even a 100-200%. We are talking about dollar over risk%

If ur a lone trader, a retail trader doing for urself primarily, if u want to live a comfortable life but only have 5-10k to trade with, then u have to be realistic in ur risk/money management, u can't possibly target $200-$400 everyday on a 5K account, as u may also be extending ur risks for gains. A sizeable account for 200-400 per day can be from 25-50k.

25k account - 2% risk is 500. 50k, 2 % risk is 1000.

200x20 = 4000 per month x 12 = 48k . 48 k /25 k = near 200%
400x20= 8000 per month x 12 = 96k . 96k/50k = near 200%

is 4k per month a good income? for general. yes.
is 8 k per month a good income? yes ofc.

If ur trading 5-10k, but wants to make 5-10k per month, that's even more horrible, as it's a matter of time u may fail, unless ur system is so superb that goes along well with a Risk and money management and planning. But not 1 system is going to work all the time, if if that good, u probably can roll 10k to a million. I only seen EA doing that, not human as yet. I seen EA of 2-5K capital grow to 300k-1m so its possible, but human trader wise, is alittle skeptical about that, presuming we are not uping the capital to achieve bigger targets.

If u have 1M and ur goal is only to achieve 200k, 20% over a span of a year, that's very possible.

Having an account size does not necessary be good for a long run. But here's a risk management method employed. A good risk manager supersedes a technical trader.
* Junior trader is given 200k to trade with, his target is 50k, his first few trades keep hitting losses, his account keep draining 200k to 150k to 100k etc. As everytime he wants to make 5-10k out of the market.


* Junior trader B given 200k, enters the market randomly with very small positions, if hes lucky, he get out accumulating that few 0.05-0.9 % growth within a 2-3% Dd management. He tries to accumulate every 20-50 dollar, sometimes lucky with 300-500 dollar.

Then come the day, junior trader A have a bad run, either he did not place stop loss to tank a negative margin, and keep losing trades etc etc. Eventually his account dropped from 200k to 50k.

Where junior trade B may have bad run too, but because his losses is so minimal compared to Junior trader A, despite being in negative pips of lets say -500 pips, Junior trader B employed a backup plan of high leverage settings only then when market seems exhausted for a reversal. So all these while, Junior trader b is just poking the market with mere gains, and hes been waiting for a bad run.

For example: eur/usd 1.2500 dropped to 1.2000.

That time Junior trader A already losses down to 50k.
Where Junior trader B only losses down to 15K. from that 500 pips - negative

Junior trade B then enters the market with a leverage let say. 10 lots trade compare to those 0.2-0.5 lots hes been using.

So when the market begins to turn and retrace/covering, 1.200-1.21, junior trade makes 100x100= 10,000 dollar, having just -4.5k by then probably.

then 1.2200, 100x200= 20,000, junior trader B is already break free ++

1.2300, junior trader B, is already making money and his 1.25 trade is just 200 pips away @ 1.23, he can either close in minor losses with the money he recoup from 1.20-1.23, or choose to hold further to get positive swaps.

By then when market moves 1.200-1.26, Junior trade B trail up to 1.2300 , 30,000 profits locked in, 60,000 floating +ve balance. partial profits taking etc etc.

So what we can learn here is that, no matter how good u think a trader is, there are times the market will move against the trading system/plan, and having too many kinds of strategy, entries etc, and a random and messed up money management plan , will end the trader faster when hes chasing gains. So u really need to know what u seek for. whats ur purpose. Just look at the bigger charts to find out the possibilities of good runs and swings, while in the short term don't risk so much with ur positioning, on dollar over risk.

a 2% risk on 1000 account is nothing compared to 2% on a 1 m account. even a system with a R/R = 1, unless ur trading a swing or at least 50-100 pips stop loss, the smaller ones ur likely to lose more than often or not in the entries, as live market don't move the way most trader thinks, u can miss ur take profit by 5 pips, then reversed to hit ur stop eventually etc etc.

So RR is a very flexible thing, there are trailing stops, etc etc, which make the system having random results, unless u clearly stick no change to take profits and stop loss, but unlikely, the more trades u do, the more mistakes u will make eventually.

generally speaking, there are many forms of trading. Just sharing 2.
1) A retail trader with an entire account of 10k invested to trade the market. This form of risk should be even lowered than 2% per trade, if hes intending to be in the arena for a longer run, it only takes 5 bad trades to -10% lol.
2) A retail trader with 10k to invest, but at any one time his account is only $500 max, while the remaining in his wallet profile, 9.5k, so the trader is using high leverage of 0.2-0.5lots @ 1:100 on 500$, to trade high leverage, so at any one time when shits happens, the trader is only losing 5% of his invested sum. He can trade other time without being emotion.

Compared to a trader with his entire account 10k in the market, and shit go against him, where -500 can become - 2000 by then. So is how u plan ur risk management and money management.

Money has nothing to do to with success in forex.
There is only one thing which makes you to be successful in forex.

Knowledge. Nothing else.

yes.

much better to start small and end big then starting big and ending small.

Knowledge means nothing....The smartest and most well versed people in the world fail at this on a daily basis.

"The only source of knowledge is experience" Albert Einstein

A perfection of means, and confusion of aims, seems to be our main problem" Albert Einstein

I think that account size does matter. Smaller accounts mean you are inherently forced to take on more leveraged risk, due to margin requirements. So lets say that a trader is trying to start with $500 and he wants to take on $5 in risk on all trades. That means he can loose 100 times in a row and he will be at zero. Another trader, starting with $5000 wants to take on the same amount of risk, $5 per trade. That means he can loose 1000 times and be at zero.

So you might say, "Well the trader that has the $500 account can just scale back his risk." Well yes this is true to a certain point, but say for example he is using a US based account so their max leverage is 1:50. That means if the smallest amount his broker will offer will be 1k lot of any currency pair, he will have to use increasingly tight stops as his balance approaches zero.

So as you can see, balance does affect your ability to be profitable, even though you may not realize it. Personally I have found that starting with less than 5k is tough.

There are a lot of variables that people don't look at. Like for example, if you do not have very much capital, you are probably less likely to have a very good infrastructure. If it matters to you, you will not be able to afford a real time news feed. So if you are trading a very small amount, <5k, you are probably not doing this full-time, so you are not focused as if you would be trading for a living. There are many other unobservable variables that work against you with small accounts.

The only thing that will make you profitable in the long run is your trading ... absolutely not how hudge is your account balance.

If you can't make money on a small account why would you think you can make money with a large account -- just because it is large?

Well, for example, one of my strategies requires the ability to asymmetrically hedge positions, so if I don't have enough capital to pay for the margins, then the strategy will not work. So, it is naive to say, "If you can't make money on a small account why would you think you can make money with a large account", as this simply isn't the case for everyone. This game is about money, the more you have, the easier it will be due to the breadth of tools, execution and information at your disposal. I am by no means saying you will succeed with larger capital, I am saying the odds are very much against you when you have little capital.

I can't agree. In your case, if you need room for your margin due to your hedging method, so you have to decrease risk on each of your position, not increase the account size.

Anyway, you aren't answering to the thread question. Increasing your account size isn't a (biggest) guarantee of success in the long run.

All is matter of risk for each of your position. The odds are the same for any capital in your account.

If you can't trade your system successfully using mico lots and a few thousand dollars then having $20,000,000,000,000 will make no difference employing that very same strategy. The odds are identical. If you have a win rate of 68% with micro lots, employing the same strategy with standard lots your win rate will be the same 68%. If you have monthly returns of 35% using micro lots you will have monthly returns of 35% using standard lots.

The amount of money returned will be larger with a larger sum of capital but the success or failure of a system of method is in no way dependent upon account size.

The bigger the equity, the bigger the spread.

Maybe it's best to keep small. Maybe not.

Ok, I think you're failing to see the point I made. If your capital base is so small that you can't reduce your trade size anymore without being able to function properly, then yes account size does matter.

And anyway, I CLEARLY answered the thread question, and I CLEARLY stated that increasing account size wasn't a guarantee of success.

You are failing to see variables that most here are not observing, in relation to account size. I stated them in my previous posts.

If they have knowledge, they do not fail.
I would not call them smart, I would call them losers.

Give a successful trader $200 account and he can make money. Give an unsuccessful trader $100,000 account and he'll blow it.
Obvoiously then it's not the size of the account but the skillset.

Of course having an adequate account size help to make a success?
In forex is quite easy to make 2-3% per month with almost very little risk.

When trying to reach for more is when trouble start. Profits only add but risk multiply.
It is amazing how many traders are so naive thinking that making 10%, 20% or even more
is a piece of cake in forex. It is impossible without risking a lot more then desire.

This can only be understood by traders that has been doing this for a while, or someone that
has real money to invest... say 20K and up. When you have it, that is the only time you realize
that losing 10% or more or getting into 20% dd is insane.

Private traders with some 50K to work with can easy pull 1500-2500 per month without having to risk
more then the average monthly gain.

So, of course you can do the same with $500 .. but the gain probably does not even pay for the
the withdraw fee. But someone for sure can crate the discipline to be constant, and soon or later move
into managing others money. Make sure you never inflate what you make. Anyone with real money will
run away from you if you talk the 10%-20% per month non-sense

J.

of course trading account sizes has an impact in trading but does it make you successful, the answer is No

If you don't have a plan for trading a 2k account, what makes anyone think that now you have a 200k account that you will be better off.

In a number of ways it is 'helpful' and in others it is no.

Helpful the most obvious would be decent returns for your time invested (also goes the other way). I found that trading larger (not too large) helped with the reward factor for the time invested. I have written it a number of times but if you spend X amount of hours planning your trade, X amount of hours waiting to execute (and sometimes not executing) and then X amount of hours managing the trade, you would like a little more than $50, even if that amount represents a signficant (10% or more) return on investment.

Unhelpful is whether you are reading, mentally, to trade a larger stack. Remember there are losses aswell as rewards. In the above example, if $50 represents 2% of a loss it is easier generally to swallow than $500 or more. If you cannot exit a lossing trade as soon as you realise it is a loosing trade because you cannot bring yourself to 'realise and accept' a larger loss, then No you are not ready for that amount of capital.

Learning to trade and developing your plan, day in day out is more important than capital size. Without you are gambling more and therefore a greater capital base will lead to bigger problems. Develope your plan, trade it flawlessly for 12 months or more and check your results vs expectant results (from all that back testing) and then when you are ready to invest and trade, go for more capital.

RT