Do you want a trading system that brings more return on your investment? Do you want to grow your capital? Do you want to reinvest your profit to make more money? If your answer is YES, this post is for you. Read it now!
Trading is not about earning a profit, it’s a way of increasing your capital. It will happen only when you invest your earned money to add more profit. But this is too technical. To do so, all you need is to follow what is called forex compounding plans.
Forex compound Plans are an easy but effective way to increase capital gradually. It encourages you to add your profit to earn more in the investment portfolio. This plan offers a consistent and stable structure that enables you to grow your account fast by adding more investment.
In this way, you can get rid of the same investment accounts that make slow, linear progress. For beginners, it’s good to switch to compounding when they can take positive pips over time.
Keep going to know the three levels of compounding plans below!
What is Forex Compounding?
What does it mean when traders say compounding a forex account? In easy words, forex compounding is a strategy cum technique. It helps you to calculate the money you earned as profit and the money you invested to add more weight over time.
In this way, you can increase your capital gradually by turning the earned money into profit. Through this safest trading plan, the traders tend to add profit in investment every time to make more profit.
I bet compounding a modest account can result in optimal growth as compared to accounts that rely on the same investment every time. And you will get real results and believe that the forex is a good way to make money.
3 Levels of Forex Compounding Plans
Systematically, there are three different levels of compounding forex. These levels cover 1$k to 50$k accounts. One important thing is that this plan is it’s not good when trading slow pairs. GBP pairs are super friendly to this plan.
However, it’s less effective on EUR/USD as it’s a highly manipulating pair. While choosing a pair, the simple rule is to stick on those that bring cash quicker. Below is a brief description of each level:
Forex Compounding Plan/ 1k$-5$lots size
Though this plan is good for a 1k$ account. But it’s not too bad for 500$ account too. If you guys have less than 500$ in your account, this plan is not for you.
In this plan, you will choose a 5$ lots size at 15 PIPS. Depending on the market situation you can drop PIPS to 12. But remember you should have a strategy that you feel comfortable with trading.
If you stay for 10 years on this strategy your last profit would be 115,2k$ after 10 years. Though it sounds hypothetical. Believe me, it can happen if your strategy is effective.
Forex Compounding Plan/10$k-20$lots size
Keeping the leverage factor in mind, you can move to level 2. Now your balance would be 10$k as you earned a decent amount from level 1. You will follow the same strategy as you did with plan-1. Here the target is making 300$daily with 4days a week.
This way, the weekly earning target will be 1,2$k and the monthly will be 4,8$k. This is possible only if your attitude is positive, your plans are realistic, and your strategy is effective.
Forex Compounding Plan/57,6$k-50$lot size
Hitting 50$k is possible if you stay on this trading method. But very few people touch this level. The reason might be the traders are mostly inconsistent. They want to withdraw much amount earlier. Here your earning target will be 750$ daily,3$k weekly,12$k monthly. But stay on this for at least 6 months before moving next.
It’s awesome to see 72$k in your account.
How does Compounding Works
Trading experts believe that compound trading is ideal for traders who can take positive pips most of the time despite the position size that they’re putting in trade. It’s all about setting one standard lot whenever you trade.
Eventually, this will make your trade profitable. Once you understand the procedure of netting positive pips there is surely a method that you can use for compounding.
Compound Interest Rate: Key Factor to Forex Compounding Plans
The key factor of the forex compounding plan is the compound interest rate. It determines the worth of a specific currency at the time of trading. A simple rule of thumb is that if the interest rate is the value of the currency will also be high as compared to other currencies.
Similarly, if the interest rate is low, the worth of currency is also low. It’s the main point to decide whether to trade in that currency or not. Serious traders calculate the interest rate daily for a fixed number of trading days.
All you need to do while compounding is to calculate your interest rate in percentage. For example, while trading with 250$account you set your interest rate percentage at 5%. The trading will stop when you lose 5% Similarly trading will also stop when you gain 5%.
If you don’t take trading seriously using compound plans, you are unaware of your position next month. This plan will make you conscious when you’re losing a lot of money. You’ll understand better that it’s time to change your strategy.
Forex Compounding Calculator
From here you calculate your monthly interest-earning based on your starting balance. The value you get from here will help you to understand capital growth.
If you want to check the growth of your account timely, try a forex compound calculator. Only put three values:
- Start Balance
- Percent per month%
- Number of months
And click calculate. For regular traders, this calculator is a must.
Can I get rich by trading Forex?
If you think it will make you a millionaire in a moment, you are wrong. The hard reality is that forex can make you rich if you are willing to lose. To be rich, you need to have a huge capital in your account, a consistent trading plan, effective strategy, risk management skills, enough demo practice, and forex basic knowledge.
We have a detailed article about can retail forex traders make money.
Can I trade Forex with 100$
The quick answer is YES, you can. But the deep answer is it depends on your trading strategy and broker’s rules. Though the profit ratio of this account will be dependent on your strategy and strict risk management skills. If you fail to calculate your daily strategic outcomes, you may lose your 100$ soon. So, take time to do thorough research.
What lot size is good for a 1000$ trading account?
For advanced traders, the appropriate lot size is 2microlots. This way, you risk1% with a stop loss of 50PIPS while trading with EURUSD. Some experts believe that starting with 1micrlot is less risky. They say it’s good to move gradually to 2 micro lots not directly at the beginning.
Forex trading broker is also a vital factor here. ICmarkets is a perfect choice as a regulated and low spread broker which also allows the highest leverage for the traders.
Forex compounding plans are the best idea to grow your account fast. This plan is truly based on consistent capital growth. Its technique of investing your earned money again safely to make a more profitable portfolio.
Eventually, if you stick to this plan your profit ratio will also increase with time. Though its long-term monitory plan requires hard work and patience. In the end, a better future is waiting for you!
Ever try this trading plan? If yes, share your experience with us in the comment box.