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(can) small accounts make a living ?!

  • #461
  • Jun 16, 2009 2:26am Jun 16, 2009 2:26am
Quoting csanyi
I hope some of you are old enough to remember seargent Friday, an old detective series of the San Francisco police. It started like: "There is a million stories in the naked city."
Sorry guys I got carried away, but I am an old dog who in a late stage in his life started forex less than a year, living ago in Canada. They wouldn't let me trade in Canada because of my age so I trade in the States. on a
$2500US account of which I still have 2300. So I am probably the guy you talk to. My burning question is, how much of a degree do you have to have...

Csanyi,

While the term 'professional' has several meanings according to the Oxford dictionary, the one translation relevant to your questions is 'competent'.

I personally know some traders (who appeared in famous trading books), that said to me it does of course help to have a degree in economics for example when looking at some market relationships between countries for currencies, or supply and demand for commodities to name only a few.

But the level of 'competence' in trading does not depend on it as such - some posters referred to it already. It is all about building the level of knowledge about the product you choose to trade, its behaviour and more importantly about yourself. What type of trader can you be? Will you want to be in and out of the market very quickly - you mentioned your age group - or maybe have grown into a patient enough person to create your trades carefully more long-term?

Many things are 'possible' as I have tried to show with this thread - are they possible for you personally; only you will know. If you believe you can enjoy doing it, then you most likely can do it.

All the best to you.

H. Rearden
  • #462
  • Jun 17, 2009 5:04pm Jun 17, 2009 5:04pm
I am currently a junior at kent state university in ohio majoring in finance. I trade throughout the london and new york sessions, generally entering positions during the opening of both. I started my account with 4000 USD and my goal is $250 dollars a day, I usually trade 100 microlots per trade so im only looking for about 25 pips to make that goal every single trading day. Ive been extremely successfull this year so far, netting well over 5000 pips. So to answer this question can small accounts make a living? I can say that it has for me and I'm just a student. If one takes lower risk trades with proper money management techniques its definetly a reality.
  • #463
  • Aug 26, 2009 2:32pm Aug 26, 2009 2:32pm
Quoting mfoste1
I am currently a junior at kent state university in ohio majoring in finance. I trade throughout the london and new york sessions, generally entering positions during the opening of both. I started my account with 4000 USD and my goal is $250 dollars a day, I usually trade 100 microlots per trade so im only looking for about 25 pips to make that goal every single trading day. Ive been extremely successfull this year so far, netting well over 5000 pips. So to answer this question can small accounts make a living? I can say that it has for me and...
Hi mfoste1:

MAXIMUM RISK = 2% * ACCOUNT BALANCE

MAXIMUM RISK = 2% * 4,000 = $80


RISK = STOP LOSS * POSITION SIZE

$80 = STOP LOSS * 10

STOP LOSS = 8

You are doing well. 25 pips a day can be done. I am not sure what your stop loss is but make sure you do not risk more than 2% of your account and honor your stop loss when hit. Do not let the rat beat you.
If you only trade long, then you can't always be wrong.
  • #464
  • Aug 26, 2009 3:10pm Aug 26, 2009 3:10pm
Quoting mfoste1
I am currently a junior at kent state university in ohio majoring in finance. I trade throughout the london and new york sessions, generally entering positions during the opening of both. I started my account with 4000 USD and my goal is $250 dollars a day, I usually trade 100 microlots per trade so im only looking for about 25 pips to make that goal every single trading day. Ive been extremely successfull this year so far, netting well over 5000 pips. So to answer this question can small accounts make a living? I can say that it has for me and...
100 microlots = 1 standard lot

So that means you've made $50 000 USD in the past year with a $4000 account? That's well over 1000% gain. That's a likely story

I have a sneaking suspicion that you're just forecasting that 25 pips a day, $250 a day and so on...

(I could be wrong, who knows...)
  • #465
  • Aug 26, 2009 3:21pm Aug 26, 2009 3:21pm
Well I'm still failing to prove that small account can make a living, but I'm still trying and still fairly sure it can be done.

I have added money though, tripled my account size I know cheating but account is still so small you'd all laugh yourselves silly

I've got 3 - 4 months at this stage to get this thing rocking, sooner would be nicer.

Remember I'm only proving I Can't do it yet, not anyone else.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #466
  • Aug 26, 2009 3:32pm Aug 26, 2009 3:32pm
Quoting Turveyd
Well I'm still failing to prove that small account can make a living, but I'm still trying and still fairly sure it can be done.

I have added money though, tripled my account size I know cheating but account is still so small you'd all laugh yourselves silly

I've got 3 - 4 months at this stage to get this thing rocking, sooner would be nicer.

Remember I'm only proving I Can't do it yet, not anyone else.
Hi Turveyd:

It takes time to build up your account just like your muscles.
If you only trade long, then you can't always be wrong.
  • #467
  • Edited 5:02pm Aug 26, 2009 4:51pm | Edited 5:02pm
This is a great thread. Iīve just discovered it and found this on the first page;

Quoting j-pax

if in a couple of years iam consistent (i hope this is possible for me) have a small account (10.k) and move to a 3rd. world country i could trade for a living.
Iīve done something similar. I lost my job in the UK so moved to Brazil (the wife is Brazilian) for 6-12 months. This should help get around the aspiring professional traders catch-22; chance of success=(experience+learning)*capital. So how to find time to get experience and learning whilst doing a full time job, or how do you maintain capital with bills to pay whilst full time trading? Have a 10K GPB account and I wouldnīt dare to try to live of earnings in the UK, probably wonīt be possible even in Brazil but the cost of living is so low (months rent here is a weeks rent in London ) that we live off savings for this time, which gives the peace of mind to concentrate on keeping things in the black in the Forex account. Worst case; spend a few months in an exotic country with as much time as possible spent studying Forex, get post recession job when I get back.
  • #468
  • Aug 26, 2009 5:00pm Aug 26, 2009 5:00pm
Quoting Hertzvanrent
This is a great thread. Iīve just discovered it and found this on the first page;



Iīve done something similar. I lost my job in the UK so moved to Brazil (the wife is Brazilian) for 6-12 months. This should help get around the aspiring professional traders catch-22; chance of success=(experience+learning)*capital. So how to find time to get experience and learning whilst doing a full time job, or how do you maintain capital with bills to pay whilst full time trading. Have a 10K GPB account and I wouldnīt dare to try to live of earnings...

10K GBP is more than enough, you can play $20 per pip if you wanted to, even 100pips per week at that level would get you Ģ1240 per week, do it through FXCM or a UK Spreadbetting site and tax free.

The issue is can you make 100pips and not lose 100pips!!

The question is, can you make consistent profits ?? This is where most people fail!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #469
  • Aug 26, 2009 5:08pm Aug 26, 2009 5:08pm
Quoting Turveyd
The question is, can you make consistent profits ??
Honest answer? Probably not. Iīve got to go with all those that say a losing streak is eventually inevitable no matter how good the edge. And Iīm too inexperienced to even know I have an edge yet.
  • #470
  • Aug 26, 2009 5:18pm Aug 26, 2009 5:18pm
Quoting Hertzvanrent
Honest answer? Probably not. Iīve got to go with all those that say a losing streak is eventually inevitable no matter how good the edge. And Iīm too inexperienced to even know I have an edge yet.

Well thats what you've got to work on, capital isn't really the issue, 10K or 1Mil if you can't trade profitably your screwed.

Sadly Losing streak for me is the norm, but I've had a few winning streaks and getting there!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #471
  • Aug 27, 2009 10:36am Aug 27, 2009 10:36am
Quoting Turveyd
Well thats what you've got to work on, capital isn't really the issue, 10K or 1Mil if you can't trade profitably your screwed.
My concern with taking large risks has been put much better here mathematically but itīs this; even with a high win/lose ratio eventually some of those losses will happen back to back (the same way tossing a coin over a long period will produce ten heads in a row despite the odds being 1:1). With 10% risk Iīd lose more than half my account (4783 from 10K actually) with just seven losses in row. With 1% risk I have to have a losing streak of 73 trades to do the same kind of damage! Even if I trade for ten years, Iīm sure thats so far down the bottom of the bell curve as to effectively rule it out. I thought this was trading 101?
  • #472
  • Aug 27, 2009 10:57am Aug 27, 2009 10:57am
Quoting Hertzvanrent
My concern with taking large risks has been put much better here mathematically but itīs this; even with a high win/lose ratio eventually some of those losses will happen back to back (the same way tossing a coin over a long period will produce ten heads in a row despite the odds being 1:1). With 10% risk Iīd lose more than half my account (4783 from 10K actually) with just seven losses in row. With 1% risk I have to have a losing streak of 73 trades to do the same kind of damage! Even if I trade for ten years, Iīm sure thats...

You've got a bit more control over the markets than a coin toss, although 10 SL's being hit in a row has happened to me, more down to bad trading though.

Your also only thinking about the negative side, with 10 wins same value as SL in a row which is just as likely to happen, you'd of made likely 8K.

So trading at 1/10th the risk you'd still of lost ( very approx ) 478 or made 800.

It's all very well, having a account that can weather a storm, but if it's not making enough money to justify your time and keep you interested then why bother.

Did you see the Derren Brown he flipped a coin and got 10 heads in a row, took him 18hours to do
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #473
  • Aug 27, 2009 4:56pm Aug 27, 2009 4:56pm
Quoting Turveyd
You've got a bit more control over the markets than a coin toss,
I presume you mean control of the trade?

Quoting Turveyd
Did you see the Derren Brown he flipped a coin and got 10 heads in a row, took him 18hours to do
The smartass answer is that I want my trading career to last longer than 18 hrs.

OK, this is just me after Googling a few pages on probability and with no formal training in statistics or maths, so please, if anybody knows better, correct me; A coin toss is 1:1 and indeed we have no way of predicting the outcome. We canīt actually predict the market either but we make a call based on past events that it could probably go a certain way. So like the coin toss there is a probability involved. The probability of a coin toss going against us would 1/2 so that to the power of seven (for our seven losses in a row) is 1/128 (for Mr Brownīs 10 in a row the odds are 1/1024 btw) so if I bet 10% of my money on a coin toss within 128 throws there would be almost certainly be a run of 7 against me and Iīd lose half my money. Donīt forget thatīs within 128 throws.

Now with all our wonderful analysis the odds are skewed in our favour in Forex. Letīs say your analysis is particularly good and you have a 75% win/lose ratio (which by all accounts is quite exceptional), so 1 in 4 of your 10% risk trades goes against you. So then itīs 1/4 to the power of seven which is 1/16,384. If your doing ten scalping trades a day and working 250 days a year then within the next six and a half years you can almost certainly have a losing streak (irrespective of your good analysis) that halves your account.

OK, not so bad, so your profits mean that your account maybe huge by that time an that means overall you are up (although Iīm not sure losing a large amount would make me feel better than keeping a small amount). But Iīm not as good as you so I would be delighted with say 60% winning trades. The same maths tells me that within 3228 trades at 10% risk I will have the losing streak which with the same trading pattern means I will torch half my account within 15 months which is to much risk for me to bear Iīm afraid, especially if it happens straight out the gate. But I think even 60% is ambitious for a newbie and at 10% risk any less would be a disaster. 55% accurate analysis would mean I would almost undoubtably lose half my money within 247 trades, with an even higher chance of it happening before Iīve built the account up. Any less than that the market would kill me before I could discover where I was going wrong.

What about taking 1% risk and the 73 consecutive losses I mentioned? The risk of that happening is virtually zero even if there is only the slightest edge. Even if my analysis is only 51% right I will make money, and it gives me space to make mistakes.

"Rule 1: Donīt lose money
Rule 2: Donīt forget Rule 1"
Warren Buffet

And who can argue with that.
  • #474
  • Aug 27, 2009 5:11pm Aug 27, 2009 5:11pm
Not losing money is where you've gotten it right.

Think about the time your wasting only risking 1% of your account, when you could be risking 5% of your account and over all making 5x's the amount for the same time spent, after all your in this to make money not lose money slowly.

Currently I'm risking $1 per pip, SL 23 4.6% per trade, if I average down I'm risking 7.5%, but as you can work out my account is small, I have a fund if I blow it I'll add some more, my fund is 4x's the size of my account approx currently so you could say I've got a $2500 account in full with the reserve.

So worst case with a average down I'm around 1.44% risk, but only 20% of my account is at risk.

See it's better to not have a really big account tempting you, but a account big enough to work normally, with money in reserve.


Derren brown, stood there same place all day throwing coins until he had all 10 heads in a row, trying to make it look like it was the first time he'd done it.

He did another 1, with horse gambling, the perfect system where someone would win every horse race, just cause it started off with 1000+ people and only 1 of them actually won every time LOL

Stat's I love stat's.

You only live once, time is the enemy don't waste it playing safe all the time and don't waste anything if you can until your profitable!!
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #475
  • Aug 27, 2009 5:27pm Aug 27, 2009 5:27pm
Thanks for making me think about risk a bit more, Iīd never explored the consecutive losses odds before although I had an inkling of it.

It sounds like with your "reserve" your not actually taking huge risks anyway.


Quoting Turveyd
Derren brown, stood there same place all day throwing coins until he had all 10 heads in a row, trying to make it look like it was the first time he'd done it.
The difference between 7 consecutive coin tosses to 10; 1/128 to 1/1024. D Brown could have been there for about 2 hours instead all day if he just wanted 7!

I might increase my risk after all, to 1.25%
  • #476
  • Aug 27, 2009 5:39pm Aug 27, 2009 5:39pm
Quoting Hertzvanrent
Thanks for making me think about risk a bit more, Iīd never explored the consecutive losses odds before although I had an inkling of it.

It sounds like with your "reserve" your not actually taking huge risks anyway.




The difference between 7 consecutive coin tosses to 10; 1/128 to 1/1024. D Brown could have been there for about 2 hours instead all day if he just wanted 7!

I might increase my risk after all, to 1.25%

I think he said 18hours, he got to 8 a few times then back to the start again

Also, why does your profit have to be the same as your risk, if your trading well your profit should be 2 - 3 times your risk, sometimes I get such a good setup I get 60pips off risking a SL of 10 for instance.

Girlie I've been training up and trading with made 40% today, 17 trades no losses using my system today, okay she's still a newbie been trading for @2months so she'll likely give this back, but it's very nice to see

Thats approx 11pips average profit per trade, hey profit
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #477
  • Aug 28, 2009 5:10pm Aug 28, 2009 5:10pm
Consecutive losses only effect draw downs. If you know for sure you have an edge then the most efficient course is to risk 10%+ and allow the account to fluctuate.

win =1 loss =0

The result of:

1111100000

is the same as:

1010101010

only one felt much better than the other. But I think economic theory prevents us from making decisions based on feelings .

But why stress your self out, divide your current account into two. One at 2% and the other at 10%+, place 90% of your total capital in the low risk account (segregate your accounts fictitiously tracked on a spread sheet) and 10% in the high risk account.

Now let each account ebb and flow, very soon your high risk account will surpass the low risk account (If you actually had an edge that is!).

Greed and fear will dictate what comes next.
  • #478
  • Aug 28, 2009 5:37pm Aug 28, 2009 5:37pm
Quoting preymoss
Consecutive losses only effect draw downs. If you know for sure you have an edge then the most efficient course is to risk 10%+ and allow the account to fluctuate.

win =1 loss =0

The result of:

1111100000

is the same as:

1010101010
My problem would be the heightened chance of 00000 oh borrocks there goes half the account straight away
  • #479
  • Edited 7:58pm Aug 28, 2009 7:46pm | Edited 7:58pm
Small accounts? How small? Making a living? How much is that? These are some questions I have been asking myself ever since I began live trading 4 months ago. I knew that I would be able to make some money trading fx & futures but what would it be like if that were all I could do? You can read some about my progress in my thread "4% a Day Forever" if you like.

4% a day consistently for a long period would be mind-boggling but hey, anything is possible... For the last couple months, anyway, I have been averaging something more like 2% a day. Even that, though - about 10%/week, would be fine if I were trading from a $20,000 account. And I am trading from a $12.5k account presently. So I'm not there yet. BTW, 10%/week - 500%/year is also mind-boggling. Many of the traders you can meet here on FF who have been in the game for years are doing fine averaging something like <1%/day. So what is realistic? Everyone must answer that question for themselves.... If you are doing well and making big weekly % on your demo account or even on your <$5k account, I would say: fine, good job, but it's pretty much irrelevant because it will be different if/when you begin to trade with larger (real) sums.

If I were in a different situation with less expenses maybe I'd be there. But for a given person who is considering trading for a living, maybe $10k-$15k would be a start. For me: I'm thinking double that at least, and probably $50k is a realistic place for me to be before I hang up on other sources of income.

If you have never been self-employed before, and do not know, viscerally, what it is like not to know where the next month's rent and food money is going to come from, based on at least years of such experience....I would say, sure - go ahead - just make sure you have a LARGE buffer of funds to live on - say 2 or 3-years worth, before you quit your day job and undertake to trade for a living. Having that kind of money in the bank is a good idea for anybody, I suppose, regardless of their experience.

Probably the most important thing a trader who wants to trade successfully long-term must learn is: how to NOT LOSE MONEY. If you don't have your psychological shit together and are not able to consistently do all the little things it takes to effectively limit risk - like consistently take small losses on losing trades, not give into greed & overleverage your positions, etc, etc, then you have no chance whatsoever of long-term success.

Are you able to make a budget that is realistic? Are you factoring in all the expenses that might be taken care of by an employer: health insurance, taxes, unexpected expenses, etc? Hell, I am paying about $435/mo just for health insurance & that's just for me alone. Taxes: I am assuming Uncle Sam is going to get every third pip I make....etc etc, blah blah blah.

Rambling post, quick answer at the bottom:

If you can trade, you can make a living, sure. Account size is relative to who/where you are. I only know about the USA. I would say minimum starting account sizes for the following:

- Single frugal guy/girl, no kids: $25k
- Older single guy/girl, maybe a kid & a mortgage in tow: $50k
- Family Man/Woman, multiple kids, comfy lifestyle: $100k

Just mho, fwiw. Good Luck All.
"If The Fool persists in his Folly he will become wise." - William Blake
  • #480
  • Aug 28, 2009 8:04pm Aug 28, 2009 8:04pm
Mate still a newbie had her first really profitable week this week, +135% seriously ( high risk so expect losses or 135% isn't long term repeatable doesn't need to be, still a newbie ) but it's enough to cover her weeks wages especially as it's tax free in the UK with a spread betting account.

I pick up average $1300 per month which I just about get by on so call it 16K.

Okay I plan to increase my life style and would like 3x's that but it'll get there.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
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