Compounding in a nutshell:
You start trading a certain number of lots depending on your account size
You risk a static percentage of your trading account for all trades
As your account size increases, your risk percent stays the same
You will be risking a bigger dollar amount per trade but the same percentage as when your trading account was smaller.
Now, I’m talking about 1 million dollars in profits here but this can be applied to much smaller Forex profits as well.
For example, if you want to make $50,000 Forex trading profits in a year, then tell me, which of these 4 Forex trading accounts sizes can make it much easier and faster to achieve that goal?:
$5,000 Forex trading account?
$10,000 Forex trading account?
$25,000 Forex trading account?
or a $50,000 Forex trading account?
It’s the $50,000 Forex trading account.