Podcast:

Can you really make money with a small Forex account? (PART 2)

In this weekly video:

00:35 – Your account size does not matter

01:22 -  Do not count success in pips

02:52 – High Reward:Risk trades

03:46 – Yes, you can trade a higher time frame chart

05:07 – What type of trader are you?

06:05 – You can make money with a small FX account

07:15 – Listen to my interview with Imre

Can you really make money with a small Forex trading account? This is part two of that subject. Let's get into it right now.

Hey, traders, Andrew Mitchem here with video and podcast number 295, and this is following on from last week's video and podcast, which was about can you really make money with a small Forex account. That was part one. Today, this is part two.

So, following on from last week's video, the main thing from that that you would have gained from that information is it doesn't matter really what the size of your account is.

Your account size does not matter

You have to learn how to be profitable. And that really doesn't matter whether your account is $100 or it's a million dollars. If you can't be profitable, and you don't have a strategy, you don't have a system, you're not consistent, you're not disciplined, it really doesn't matter what the size of your account.

And on last week's video and podcast, I gave some examples about how you can grow the size of your account from other sources of income, from selling signals, from trading from friends and family possibly, but there are other ways you can increase the size of your trading account right now, and of course, the best way is to make gains on your account. But if you're not profitable, the rest of it doesn't matter.

Do not count success in pips

So what can you do to be profitable? Well, one of the things that I find that so many people still fail to understand is they count their success or their failure in the number of pips they make. Now, just yesterday I held a one-and-a-half hour live webinar, free to the public webinar. Never once did I mention how many pips I've made or have lost. Doesn't matter, completely irrelevant. The only time I use pips is when I'm looking at taking a new trade and I'm calculating my position size needed, and that's according to the stop loss and pips that I'm taking on a trade, and that's according to the risk I want to take, and it's according to the currency pound trading.

So, yes I use pips in terms of I'm risking X number of pips on a trade, but don't forget a stop loss should never have a fixed number of pips. Just because I'm trading the British pound U.S. dollar on a one-hour chart doesn't mean to say I only use 20 pips as a stop, let's say. It doesn't matter. The stop loss needs to be in the place it needs to be for the protection of that individual trade, regardless of its currency pair, regardless of the time frame that you're trading because the market moves in different, in different amounts.

So what might be good last week on a trade on a one-hour chart may be very different from the market conditions right today. So yes, I need to know how many pips my stop loss is, but it doesn't mean to say, let's say it was 20 pips. Doesn't mean to say, and the trade goes wrong it doesn't mean to say, "Oh, I've just lost 20 pips." Doesn't matter. I'm losing X percent of my account.

High Reward:Risk trades

But also you can use that to your advantage because of course we want high reward-to-risk trades. So let's say that your profit target just happened to be 60 pips, for easier calculation, 20 pip stop loss, 60 pip profit target. That gives you a three-to-one reward-to-risk trade.

If it hits the profit, I don't make 60 pips. It doesn't matter to me that I've made 60 pips. What it does matter to me is that I made a three-to-one reward-to-risk trade. For these numbers, let's say I risked one percent on that trade. The trade goes wrong, I lose one percent.