Let’s imagine you have a small account like $2000-$3000. What do you want from it? Most likely, you would like to live from it, so depending of a country you live in you’ll need somewhat between $600 to $2000 a month for a decent living, right?
In this scenario, you’ll need to make 20-100% of your account per month. In order to make this much money, you will need to be either a super lucky and super professional trader with an astonishing winrate and good consistent risk reward. Most likely you are not. I am not if you ask me. So I don’t have astonishing WR and good RR. So what can I do to make this much of money, when my trades are not so good? Any ideas? Yes, I can risk more per trade and HOPE this trade will go in my direction and also HOPE that somehow I will stay calm seeing all this huge profits just grow and grow, and also HOPE I will be able to not close the trade when the pullback happens, and also HOPE I will stay calm and emotionally stable if the trade after having being in big profits will turn back and go to breakeven or a drawdown. Sounds familiar? So actually how mentally strong this person should be to bear all these emotionally? And how many times in a row the the person will be able to do it? Is it realistic to expect consistency from this style of trading in the long term?
But ok, let’s imagine, someone is able to produce 100% a month from his $2k account? Can you imagine how emotional this person will feel? He definitely knows that 5-10% a month is already a great, great result (if done consistently though), and he just made 100%. He will probably think he’s the king of the universe and he will probably try to make even more than 100% that next month. Really the only thing he does is taking a big, big run off the high high cliff and soon he will be dead, meaning he’s account will be blown.
This kind of thinking will help me to better understand the absurd of the desire to flip an account, at least for myself.