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Moneymanagement

How much can you make in 5 years? Money makes money . It's an age-old saying, probably because it's generally true. But starting out as a retail trader can be daunting and at times, frustrating. It takes time to build up a sizable account big enough to allow us to take the leap from trading part time, to full time trading. Something that has kept me motivated over the years is an excel spreadsheet a friend of mine made. It demonstrates how consistent monthly returns can lead from a small and humble account balance, to a huge one. Thanks to the compounding effect. Assuming you don't make any withdrawals, let's see where consistent, conservative trading over 5 years could get you. SCENARIO 1: SHRIMP Starting balance: $1,000 You've traded demo for a while, you've developed a winning formula, and you're ready to put your money where your mouth is. Monthly contributions: $100 A hundred bucks is all you can afford at the moment, after bills and overheads Monthly returns: 8% By being selective in your trades and risking between 1-2% per trade, your conservative approach has allowed you to be consistent so far Year 1: Month 3: $1,484.35 Month 6: $2,220.47 Month 9: $3,147.76 Month 12: $4,315.88 Year 2: Month 15: $5,787.38 Month 18: $7,641.04 Month 21: $9,976.13 Month 24: $12,917.66 Year 3: Month 27: $16,623.14 Month 30: $21,290.98 Month 33: $27,171.11 Month 36: $34,578.39 Year 4: Month 39: $43,909.42 Month 42: $55,663.83 Month 45: $70,471.01 Month 48: $89,123.79 Year 5: Month 51: $112,620.92 Month 54: $142,220.53 Month 57: $179,507.52 Month 60: $226,478.39 Behold! The humble $1000 has been transformed into more than 200k. That's just 4 winning trades a month at 2% per trade. SCENARIO 2: FISH Starting balance: $10,000 So you've got a good chunk of savings lying around and you're ready to get serious with your trading. Monthly contributions: $0 You've stumped up all of your available spare resources into your trading account and you want to enjoy spending any surplus money from your other income streams. Fair enough. Monthly returns: 8% By being selective in your trades and risking between 1-2% per trade, your conservative approach has allowed you to be consistent so far Year 1: Month 3: $12,597.12 Month 6: $15,868.74 Month 9: $19,990.05 Month 12: $25,181.70 Year 2: Month 15: $31,721.69 Month 18: $39,960.19 Month 21: $50,338.34 Month 24: $63,411.81 Year 3: Month 27: $79,880.61 Month 30: $100,626.57 Month 33: $126,760.50 Month 36: $159,681.72 Year 4: Month 39: $201,152.98 Month 42: $253,394.82 Month 45: $319,204.49 Month 48: $402,105.73 Year 5: Month 51: $506,537.42 Month 54: $638,091.26 Month 57: $803,811.22 Month 60: $1,012,570.64 Now it's unlikely that in this situation, you'll be trading pip sizes more than what would bank you 100k in 3 months, but the point is that you can trade conservatively and get to a point where you're earning enough to live like a king in just a few years. Happy trading everyone! Hope this has helped to motivate you and think about trading more conservatively to preserve your capital and think about your long term future. AvidTrader P.S. If anyone would like the real spreadsheet, PM me.
Education
by avidtrader89
3
Top 5 Risk Management RulesTop 5 Risk Management Rules: 1. Only Trade with Risk Capital -Risk Capital is the amount of money you are willing to lose and do not include your living capital into your trading account! 2. 2% Risk Management -The 2% Rule prohibits you from risking more than 2% of your account equity on each trade you are entering. 3. 6% Risk Management -The 6% Rule prohibits you from opening any new trades when your current open risks in your open trades reach 6% of your account equity. 4. 10% Risk Management -The 10% Rule prohibits you from opening any new trades for the rest of the month when the sum of your losses for the current month and the risks in open trades reach 10% of your account equity. 5. Risk to Reward Ratio -Only take the trades which provide you at least 1:2 Risk to Reward Ratio
AMEX:SPYEducation
by YongLiang
EURUSD Weekly long legged Doji on massive supportEURUSD closed the weekly candle with a long legged Doji outside the bollinger band. Not to mention the massive support zone we have around 1.0510. This could activate a rocket correction from the last 14 days of downtrend. Another interesting thing is the movement from November 2015. After weeks of downtrend the price turned in the last November week at 1.0510 and made a correction of 50% in rocket speed. Is the same thing going to happen again? If not next week is it going to happen in the first December week (Italy Referendum)? In my opinion the parity of the EURUSD is still far away. I don't think that we will break the major support at 1.0510 which would pretty much let the EUR/USD put in free fall mode. I think we will see the 1.0950/1.1000 at least before we go further down. This trade may fit in someones trading plan. For me are the facts above to attractive. Can't just ignore them :) Entry Level: 1.0600 +/-10pips Stop Level: 1.0490 Target Level: 1.0950
Long
by Trinad
Good opportunity to go LONG on FacebookThe price action has hit the long-term trend, giving us 2 possible scenarios: Blue path: The price bounces at the long-term trend and continues to go high in a 1:3 win ratio. Red path: Less likely given the past performances of FB, the price would break the support at ~114 and will continue to go low. No SHORT entry recommended in this case given the uncertainty of the next strong support. "The four most dangerous words in investing are: ‘this time it’s different.'" – Sir John Templeton
NASDAQ:METALong
by adelriosantiago