Russ Horn

Presents

Grow A Small
Account Faster
 www.RussHorn.com

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Your Small Account

It's well advised that when we start trading, we start with an account that is very small.
There is nothing worse than funding a large account and then losing all your capital.

As a traders, many of us will experience the account "blow out". We will get a margin
call or a series of losses that will diminish the account. This is exactly why we start with
a small account, the potential for loss is quite high when we start.

Once we become "consistent", we can add funds to the account and trade with a larger
account. BUT, many of us starting out don't have additional funds to add to a trading
account. I would go as far as suggesting that we don't add funds to the account, but
instead, grow the smaller account into a large one.

What is a smaller account? This could be one that is $100 - $250. This is a good
account to start with. When we start trading, we have generally invested in a program
and likely lost money along the way as we learned. I would love that you don't lose, or
give away, any more money.

Start with a live account of $250 and go from there.

This live account trading should only happen after you have some consistency trading a
demo account. Once you are consistently profitable, then you go live. Get used to
trading the live account, and once you have made the adjustment to trading with real
money, then it's time to start growing the account.

With an account of $250 dollars, earning 2% a trade will take a long time to grow this
account. 2% on $250 is only $5. Earning $5 a trade will take you a long time to grow
the account into something you can live from.

Without adding additional finds to the account, what can we do to increase the account
size in a more timely manner?

Not everyone has additional funds to add, or if you are like me, you simply don't want to
add additional funds.

Let's look at 8 ways you can grow this small account faster.

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1. Increase The Risk Amount Per Trade

This one seems like a no brainer, but most traders don't know you can adjust the risk
amount of your trades.

*This is one trick to growing an account faster that should ONLY be done by a trader
that has become consistently profitable and is able to make money trading. If you still
struggle with this, then do not attempt this maneuver.

The industry "default" is to risk 2% of your account size on any given trade. This is fair.
It's a good risk amount. It will keep your losses at a reasonable size that won't blow
your account after one, or after a string of losses. The trouble in keeping your initial risk
amount small is that your gains will also be small. If you risk 2%, chances are you will
gain 2% with a winner.

Like we mentioned earlier, a 2% gain on a $250 account is only $5.

What if we upped that to a 4% risk on the account per trade. The winners will now
become $10 if we are using a 1:1 reward to risk ratio.

If we add another 1% risk to bring it up to 5%, our trades are now going to net us $12.50

Generally, the smaller the account, the higher the risk you can take on your trades.
The bigger the account gets, the smaller the risk will become.

Traders will start with a small account risking 5% on a trade, but as that account grows,
the risk drops to 3%, then 2% and even less. Traders with million dollar accounts often
never risk more than 0.5% on a trade.

Half a percent gain on 1 million dollars is still $5,000.

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2. Go From 1:1 To 2:1 Ratio

The safest way to place a target is to use the same number of pips that the stop loss is.
If the stop on your trade was 20 pips, the target will also be 20 pips. This is what is
called the Reward to Risk ratio, and in this case, the RR is 1:1.

A method to grow the account faster is to target twice the stop loss, to increase the
Reward to Risk ratio to 2:1.

Risking 2% on an $250 account is $5 risk. Targeting double that means you will aim to
get 4% on the trade, and that will equal $10 a win. Of course, not every trade you take
will go twice as far as our stop loss, so you want to wait for few conditions.

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1. Trade close to Equilibrium.

This is the balancing point of the market and will have the greatest potential to move the
farthest. When the market is at Equilibrium, the odds of a bigger than average market
move increase substantially.

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2. Trade in the direction of the trend.

We want to trade in the direction that market has momentum.
In our case, we will look to the EquiScape for that direction.
If the EquiScape is bullish, we will take long trades.
If the EquiScape is bearish, we will take short trades.

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3. Ultimate Trade Setup.

This is what I call the U.T.S.
It occurs when we can draw a trendline in the opposite direction of the overall market
direction.
An up trendline in a down market.
A down trendline in an up market.
It doesn't matter what system you trade with, just as long as you can identify a market
bias. There are several ways to do this, but with Equinox, we have a couple of clear
ways to identify a market direction.

An uptrend:
1. Price is trading above Equilibrium.
2. The EquiScape is bullish.

A downtrend:
1. Price is trading below Equilibrium.
2. The EquiScape is bearish.

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4. Reduce the Initial Stop Loss

This one is a little riskier, but you can cut the size of your stop loss in half.
If you were to normally place a stop loss 30 pips away from your entry, you could cut
that in half to 15 pips. Your target will effectively be the safer 1:1 placement, but the
stop loss will cut in half. This is a more desirable method when dealing with a chart
pattern like a channel.

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3. FIB Retracement
This method could fall into the increase your target to 2:1, but you will see why this is in
its own section.

Placing a trade that targets 1:1 Reward to Risk is the safest way to ensure your target
will be hit. A market that hits a 2:1 target will always first hit the 1:1, but a market that
hits a 1:1 target won't always go as far as the 2:1. With that being the case, we want to
get a 2:1 return WITHOUT changing the 1:1 stop and target placements.

This sounds like a magic trick, but we can do this using the Fibonacci retracement tool.

Once we identify a trade setup, we will apply the Fib retracement tool. We draw it
connecting the close of the entry candle to where we would place our stop loss. The
standard Fib Retracement tool will give us three levels in between the points we
connected. These levels will be at:

38.2%
50.0%
61.8%

Depending how you choose to draw the connecting line, either the 38.2% or the 61.8%
level will be closest to the entry. Whatever level that is, it's the one closest to the entry
that we will concern ourselves with.

Now that we have our Fib retracement tool on the charts, we will wait for the price to
retrace to the fist level that is closes to the entry. Once the market touching this level,
we will enter the trade.

This is going to seem counter-intuitive for a lot of traders as it will seem to be going
against the market.

1. For a long trade:

The market will have to drop down to touch the top of the retracement levels, and then
we enter a buy trade.
2. For a short trade:
The market will have to climb up to touch the bottom of the retracement levels, and then
we enter a sell trade.

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4. Let Trades Run

Sometimes the market can go for a nice long move, one that's much bigger than the
basic 1:1 or even 2:1 targets.

Catching one or two of these each month can dramatically add to the account. We can
regularly get 5:1 and even up to 10:1 trades if we allow the market to run.

We don't use a hard target, instead, we trail our stop loss. It's the stop loss that will
ultimately get us out of the trade.

The trailing stop loss method used in the Equinox system is designed for the
EquiChannel, and won't be ideal for letting a trade run. The EquiDots serve us well for
trading inside the channel, but we have to come up with a different method if we want to
let the market move. There will be a lot of chop in the market, it will never move a long
way in a smooth fashion, so we want to accommodate for that. There are a couple of
ways to do this.

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1. Slow the EquiDots.

For trading within the EquiChannel, the EquiDots have a setting of 8 periods. In order
to allow a trade to run, we can slow this down to something like 21 periods, 55 periods,
or even 89.

The slower setting will pull the dots away from the price and it will then allow the market
to make the moves it needs to make when it goes further.

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2. Swing Highs/Lows
Manage the trade using the swing high or lows the market makes.
As the market moves, it will move in very discernible swings forming highs and lows as
it goes. Move the stop loss with each new swing the market makes.

A buy trade:
1. Stop loss goes under each new swing low made by the market.
These swing lows will get progressively higher, so the following swing low will be higher
than the current swing low.

A sell trade:
1. Stop loss goes above each new swing high made by the market.
These swing highs will get progressively lower, so the following swing high will be lower
than the current swing high.

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3. Higher timeframe.
Manage the trade form a higher timeframe.
You can use the EquiDots without changing the settings, but use the Dots on the next
higher timeframe. As the trade progresses, you will want to continually check the next
higher timeframe for an opportunity to start manage the trade from there.

When you place your initial trade, you won't want to touch your stop loss. If you start to
manage the trade from the current timeframe, you won't give the market the room it
needs to create the space required to manage from the higher timeframe.

Place your trade and place your initial stop loss.

Watch the higher timeframe for an instance to move your stop along the Dots.

In a buy trade:
The higher timeframe dot will move higher than your stop loss. Once this is the case,
you will start to move your stop loss along the with the higher timeframe dots. As the
dots climb, so will your stop loss. It will be exactly like managing the trade on the
regular timeframe from here on out.

In a sell trade:
The higher timeframe Dot will move lower than the stop loss. Once this happens, you
will manage the trade from the higher timeframe as though it was a regular trade.

This is a process you can do across several timeframes. You could realistically take a
trade on a 5 minute timeframe and end up managing it on the 1 or 4 hour.

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5. Trade Smaller Timeframes

Where is the money in Forex? It's in the smaller timeframes.
Too many traders confuse the number of pips with money made, and this isn't the case
at all. What it comes down to is the value of the pips made.

Let me explain why the smaller timeframes are where the money is.

When we trade, we risk a certain amount of our account on each trade we take. We'll
use the 2% standard for this example.

If we trade the daily timeframe (where people seem to think the money is), we will place
a trade, our stop and our target, just like we would any trade we take.
While it's true that on the daily timeframe, our targets can be in the hundreds of pips, but
so will our stop loss. We might have a 250 pip stop loss and a 250 pip target, maybe
even a 500 pip target.

Using a 250 pip stop and a 250 pip target means our reward to risk is 1:1.
With a 1:1, if we are using 2% on the trade, we will gain 2% if we win the trade.
How long does a daily timeframe trade take to play out? It can range from a few days to
weeks. For a trade we sat in for 5 days (or 5 candles), we will have earned our 2% on a
winner.

On a smaller 15 minute timeframe, we can look at the same info.

We could use a 25 pip stop and a 25 pip target giving us the 1:1 as on the daily trade.
On the 25 pip stop, we still risk the same 2% of our account.
A trade on the 15 minute timeframe can take the same number of candles to play out, in
this case it would be 5. Over five 15 minute candles we are looking at 75 minutes, or an
hour and 15 minutes.

To earn 2% on the daily timeframe, it took 1 week.

To earn 2% on the 15 minute timeframe, it took just over an hour.

If we were trading just 1 currency pair:

On the daily timeframe we would take one trade a week making 2% a week.
On the 15 minute timeframe we could take a minimum of 5 trades a week earning 10%
a week. If we take 2 trades a day, we could earn 20% a week.

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6. Take More Trades

This is another no-brainer, BUT you want to approach this with caution. Over-trading is
a real thing and could result in you giving back what you make. This section is loaded
with subtle disclaimers and warnings.

These days I am a "one trade and done" trader. If I can bag a winner, then I close up
shop for the day. It doesn't have to be this way though, you can take several trades and
look at several currency pairs.

I find this to be a young traders game these, I don't have the attention span or the focus
to properly monitor 28 pairs on a 5 minute timeframe.

For me, I can make my 2% on a trade and be happy with that. That's one trade. What
if I were to stick around and take a second trade or even a third trade. That could grow
the account 4 or 6% on one session. Conceivably, we can grow an account 10% in a
day just by taking several trades during our window.

I don't think I need to mention it, but I will... each trade must be a proper setup and the
market conditions must be favorable. Along with the appropriate time of day, taking
multiple trades can increase your account quickly.

When I take several trades, I tend to take them one at a time instead of several at once.
I don't like the additional risk that 3 simultaneous trades present, 3 trades at 3% each
means I could lose 6% of my account if they all go the wrong way, and this is a very real
possibility.

On the upside though, if we were to trade the 5 minute timeframe, we could easily get 5
to 10 trades over a few hours if we look at 20 pairs. You have to be on your game and
you must be focused at all times. The small timeframes move quickly, and with several
pairs, you attention is going to be spread out.

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7. Add To Your Position

It's possible to get 50 pips from a 20 pip market move.
You would do this by "adding to your position". As the trade progresses, you would
place additional trades along the way.

Adding to your position is just a fancy way to say "take another trade".

There are several ways to add to your position, but the "pip count" is the most common
method and requires nothing extra from the market to make this work (other than follow-
through).

When we get a setup to place a buy trade, we might decide our target is 20 pips.
Let's assume that the trade follows through to the 20 pip target for this example.

Placing this trade will net us 20 pips as the target gets reached.
When the market moves in our favour by 5 pips, we place a second trade.
We use the same target as the initial trade, so this second trade would get us 15 pips.
Every time the market moves another 5 pips in our favour, we place another trade.

Using a 20 pip target and placing a trade every 5 pips will give us 4 trades in the end.

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Trade 1 = 20 pips
Trade 2 = 15 pips
Trade 3 = 10 pips
Trade 4 = 5 pips

20 + 15 + 10 + 5 = 50 pips

I have heard of traders making over 1000 pips on a 100 pip move by simply adding so
many additional positions to the trade.

I know of one trader who consistently makes over 30,000 pips a month using this
strategy.

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8. Move To Break-Even ASAP

Part of growing account quickly is keeping what you collect. If you earned 50 pips, you
want to keep them and not give them back to the market. It's no good making big
money if you end up giving it away to the market.

The best way to "keep what you kill" is to move your stop loss to break-even as soon as
you can.

Moving to break-even is what we call it when you move your stop loss to the same price
you entered the trade. This means that if the market were to reverse, nothing would be
lost. We won't make any money, but we won't lose any money either.

This concept is so important to the larger trading entities that there is a standing rule:

Step 1 - Don't lose money.

Step 2 - Make money.

This can be tricky for a lot of traders as the question becomes "when is the best time to
move your stop loss to break-even". Like most things in trading, there are several ways
to do this. You will find an affinity for one way over another.

The basic version of this is to move your stop when the market moves into profit by a
certain percentage of the stop loss amount. One I like a lot is the 70% rule. When the
price moves 70% of the initial stop loss amount, move to break-even.

For example, if your initial stop loss was 20 pips, when the market moves 70% of that,
or 14 pips, into profit, move your stop to break-even. This will be when the candle
simply touches this level. You can alter this number to serve you in a way you prefer.

This method is nice and easy, and it's one that your MT4 platform can do for you. Once
you have placed the trade, you can set the trailing stop. Remember that the trailing
stop is done as points and not pips, so you will want to add a zero to the figure you
input. In the above example, we move our stop at 14 pips, so with the trailing stop
feature, we would input 140.

A variation of this is to move your stop loss to break-even when a candle closes above
the 50% level. This is a candle CLOSE, not just a touch by the candle.

I have been using another method that may seem a little more aggressive, and this is to
move to break-even when an entire candle clears the entry level. I will have entered at
a certain price, and as a candle prints with the Open, High, Low and Close beyond that
level, I will move to break-even.

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70% method

Clearing method

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Best of luck to you and in your trading career!

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