Hi guys,
This is my first post here. I am really enjoying looking at the forum and looking at forex. It is really interesting.
I am new to forex and trying to learn as much as I can. I will appreciate your help.
Just curious, why it is always said that someone with a little investment can make high returns monthly but as the investment grows up it becomes hard to achieve the same results? In both cases the investment size is negligible as compared to the total market size so in both cases his percentage of the market size is almos 0%.
So what is the difference between investing $1000 and investing $100000? if both equal 0% of the total market? I am assuming both are using the same robot for automatic trading (or within PAMM)
I reckon I could write a book on the reasons why - but will try and keep it extra brief
First of all forget robot trading - even if you do think it takes the emotions away
Unless you have spent over 100k's or more on a bot designed by a super computer - your normal retail type "bots" from $99 to $499 will just go stir crazy normally within 3 -6 months - buts lets say 7 months Max.
So you are back to a mechanical and or discretionary method / system and as well all know - there is not that many that can give you profits day in day out with low drawdowns etc - otherwise 85-95% of all FX traders would not be continual losers
Now - having got those reasons covered - the big reason is all down to the market and money.
I can place a live 10 lot a pip trade on within say a second - 100 lots or 250 lots might take minutes - or even up to an hour or more -o all depending on so many factors . So its easier to place trades on with smaller size lots - and easier to exit with them as well
Next point at least 95% of the working population do not earn over £100k per annum - ie £2k per week gross and say over £1400 per week net
Therefore 95% of people look upon above £1000 as a fairly large amount of money and not one you just give away
95% or so of people would all have different levels
£100 to some people is a lot and they would never risk it day in or day out gambling etc etc but then maybe 25% might say I will risk losing £250 on a trade of even £500 on a trade etc etc
Therefore to grow an account from say £500 to say £10k - or even £25 k is all within normal limits and keeping losses under say £250 or £500
BUT
Start going above 100k and then trying to grow that by say just 10% a month ( easy on small amounts ) might mean taking losses of over even £1000
Remember 95% of people think a £1000 or more is a lot to just lose on a punt
Psychology gives you a financial wall - all according to your existing wealth or earning power.
That why most traders cannot keep compounding and continually grow an account to say one million or ten million pounds in say a few years.
Maybe over 5 or 10 yrs they can -= as they adjust their psych to handle larger stakes and losses over £1k or £5k or more on losing trades.
There are another 10 reasons or so more - but said would keep it short
Hope that helps
Regards
F