Due to the popularity of forex trading on social media, the huge leverage offered, the liquidity and the low minimum deposits that brokers offer, a lot of traders are coming into the market with small trading accounts. With these small accounts, there is always the goal of large and quick growth of trading capital, until you’re able to make a living trading… Right?
Growing trading capital fast enough to make a living from your hobby is extremely hard to do and trading with prop firm capital is a much faster way to be earning a living from trading. In this article we are going to look at how to realistically grow your forex trading capital.
The Harsh Reality Of Growing A Forex Trading Account
What they don’t tell you when your start forex trading is the fact that over 75% of retail traders actually consistently lose money in the markets. There’s actually a famous statistic stating that 90% of traders lose 90% of their accounts within 90 days, which is a bit worrying.
It’s safe to say that the dream of growing $10 to $1,000,000 is very unlikely, but let’s go with the assumption that you’re already a consistently profitable forex trader banking a few percent gain every month. Let’s crunch some rough numbers…
- You are able to consistently average 5% per month return (Putting you in the top 5% of traders around the world).
- You start forex trading with $1000.
- To replace your income, you need $3000 per month.
- You would need a $60,000 trading account to replace your income. Meaning account growth from $1000-$60,000 would be needed.
Growing an account from $1000-$60,000 is not impossible but it’s going to take a very long time. You could argue, ‘I’ll just risk more and get bigger gains’. Well, the more you risk, the more you will lose. Although you could risk 10% or even 15% per trade, the chance of you staying in the game long enough to make that $59,000 profit is extremely low and would frankly make you one of the best traders to have ever lived…
So, What Should You Do With Your Small Trading Account?
Although the article has been pretty pessimistic until this point, don’t worry because there is actually a very quick way to grow your trading capital. This is by obtaining prop firm capital.
Prop firms are literally designed for traders looking to seek more capital. They will, in short, get you to pass a test to prove your profitability and once you have passed, they will fund you a large account to trade and keep around 70% of the profits!
There are a lot of prop firms out there but I have compiled a list of the best 10 here, and even a guide here on how to pick out the best firm depending on your trading style.
Just weighing up the options on growing your capital…
- Growing a $1000 to $60,000 whilst part time trading and not blowing your capital through being too aggressive. (The chances of this working realistically are very slim).
- Spending $500 on obtaining $100,000 in funding within 2 months. Averaging 5% monthly with a 70% profit split, banking $3500 to your account every month to spend or trade with. (The chances of this working are much more likely).
There are your two options. The majority of forex mentors on the internet are trying to sell you a course, so they will tell you that it’s possible to get huge returns, risk more money and all you need to grow capital fast is trendlines and risk management. There is nothing wrong with trendlines and certainly not risk management but we need to be realistic and the BEST chance you have of growing your capital enough to make a living off trading is to not grow it at all, but to borrow someone else’s!
Not only do prop firms like 5%ers offer a huge amount of funding, they also offer scaling. For instance, every time you reach 10% profit on your 5%ers funded account, they double your account balance. This isn’t even rare, most of the other prop firms like BluFx also offer capital scaling!
For every 10% gained, imagine having your account doubled! There is absolutely no way even an amazing forex trading can compete with that level of growth without having a funded account.
Is It Worth Trading Your Small Capital?
Although prop firms are a much better and faster way to earn great trading profits, it is still very much important to have your own small trading account. I would highly recommend that every time you take a withdrawal from a prop firm like MyForexFunds for example, you deposit a percentage of that withdrawal into your own trading account.
After trading with multiple prop firms for a few months or even a year, you would have put enough into your own trading account to have a substantial balance in their now and no longer even need external capital to trade for a living!
In summary, the most realistic and fastest way to grow your forex trading account is to leverage prop firms and take on additional capital. The amount of possible returns, the new level of capital and scaling plans offered by prop firms are impossible to beat with just your own small account, even if you were the best forex trader in the world.
- Apply for prop firm funding from one of the leading prop firms.
- Get funded.
- Trade your funded account, withdrawing every single month.
- Put maybe 50% of your withdrawal into your personal forex account.
- Apply for higher levels of funding, or funding from more prop firms.
- Rinse and repeat until your personal account is large enough to trade earn a living from trading forex with.
I hope you found this guide useful and informative. If you have tried this out or are going to scale your capital this way please do let me know in the comments below, I’d love to hear how it’s going for you.