Secret of Wealth Building In Forex Trading

What is The Secret of Wealth Building in Forex Trading?

ads

ads

One of the greatest features and big secrets of successful wealth building in forex is leverage and compounding on your profits. With the help of leverage you can buy much more currency than what your actual account size allows you on a 1 to 1 basis.

When you use leverage, your Forex broker allows you to increase your purchasing power by as much as 4,000%!

As an example, for every $1 in your Forex trading account, many forex brokers will allow you to purchase $400. This feature is very powerful and has a great earnings potential with a minimal financial investment.

However, you must have a great forex trading strategy to handle this leverage feature very well in order for you to take advantage of its maximum earnings potential but at the same time manage your money well for minimum risk exposure.

So, leverage simply allows you have a much greater purchasing power and increase your profits per trade accordingly. Compounding allows you to formulate a strategy with the objective of building wealth from your profits.

So, instead of taking money out of the account every time profit accumulates, those profits are used for the next trades. Let’s look at an example of how leverage and compounding can dramatically grow a small account size over time:

The following is a projection of three scenarios over a three year period each. The first starting with a $3000 account, the second starting with a USD $7,000 account and the third starting with a $15,000 account.

All three calculations are based on a 2% weekly net increase in account size. No profits are taken out of the account, they are re-invested in next week’s trades. So, in other words, we will see how these three accounts would grow over a periods of three years based on the above criteria. You can read more about a forex trading strategy which can help you convert $500 into $1 Million in just 3 years gaining only 10 PIPs/Day!

Example 1:

  • Starting Account Size: $3,000
  • Weekly increase in account size: 2%
  • Account growth after 1 year: $ 8,401
  • Account growth after 2 years: $ 23,526
  • Account growth after 3 years: $ 65,879

Example 2:

  • Starting Account Size: $7,000
  • Weekly increase in account size: 2%
  • Account growth after 1 year: $ 19,602
  • Account growth after 2 years: $ 54,893
  • Account growth after 3 years: $ 153,718

Example 3:

  • Starting Account Size: $15,000
  • Weekly increase in account size: 2%
  • Account growth after 1 year: $ 42,005
  • Account growth after 2 years: $ 117,628
  • Account growth after 3 years: $ 329,396

For more details on how to calculate the final return value on a starting account balance in a specified number of compounding periods with a known interest rate (how much can you make per trading week) you can use this financial calculator: http://www.calculator.net/finance-calculator.html

So, can you now see the full power of compounding over time? Now, I’m sure you will agree me when I say that this feature alone is one of the greatest tools a forex trader has for building wealth.

An account of $3,000 could grow exponentially to $ 65,879 in just three years using the right money management strict rules along with a profitable and successful forex trading system.

Conclusion:

In forex trading, you do not need to earn as much pips as you can, absolutely not. All you need is to utilize a solid and outstanding money management strategy with a great and profitable forex trading system. Just be disciplined and you could be one of the 5% of forex traders who live the dream of creating true exponential wealth in the forex market.