Get your Hands Dirty
I answer tons of emails every day. Here are some interesting conclusions I have extracted from one of the latest emails I answered. I thought the nature of the answer was good as a representation of two things:
#1 I get hit up for loans or money gifts many times a month and so I answer why I have to say no to all such requests.
#2 I get asked “how much can I make following you?”
Please understand that I am omitting the full email text itself, but these are the two questions asked in this particular email. This is what it boils down to:
Hello (Name Deleted),
With a $1,000 starting capital, the balance/equity is too low and the risk compounds tremendously. Let me explain why that is.
You cannot “wash” a micro lot in half or in tenths. Thus the risk is a lot bigger because the amount is so low. It’s very hard to make money with $1,000 as your starting capital.
I usually recommend that folks start with an absolute minimum of $3,000 to $5,000 and then go demo for a week or two first to “get it” and understand what we are doing.
It’s not the 70% winners I have to worry about! It’s those cursed 30% losing trades. My system works them out slowly over time but it is most assuredly hard work to get out of a bad trade.
As for advancing you money to fund your account; no, I really do not know anyone that would be willing to do that. The reasons are fairly simple on this.
Almost everyone I know is a trader. They make 1-5% a day with money under their control and they trust themselves. I don’t know of anyone that would trust a stranger, totally unknown to them, to trade some of their money with a chance of maybe getting it back in a year at 100%. It just makes very, very little sense.
Please understand that each one of us traders had to work very, very hard for our money to gain the grubstake used to invest. Our gains came at a high cost of blood, sweat and tears; sometimes 12 to 18 hour trading days nursing trades. Each one of us has crawled through mud and hell, and back again, to get to where we are and we deeply knows the battle scars of a war-torn, hardened soldier.
I have made very bad mistakes in my past, even to try and help someone out once in a while and it has always cost me. Each and every time. Not one time have I ever received my help/investment back.
I even went against my better judgment many, many years ago. I loaned a very good friend $10,000 because he blew out his account trading too large. We had a super long talk and I trained him and said: “Now you are going to go small, right? You’re going to take your time and build this up slowly, right?”
“Yes! Absolutely” was his reply.
He blew out in a matter of months again trading too large and I never saw my $10K back. This is a good friend, mind you.
That lesson taught me to never make such a mistake again.
I get a few requests every month on Twitter and various other places for loans and sometimes I even get the boldness of being asked for purely free money; a gift. Obviously I can never do this. I would go broke. Fast too.
It’s very important that, as traders, each one of us has “skin in the game” and that is something that deeply and personally costs us. It’s best if we had to actually go out and work a job and labor hard, scrimp and save $5K for a year… because then we deeply know the value of that money! It’s very, very precious to us. It is the life blood of our trading accounts; the life of the flesh is in the blood and we cannot afford to have accounts get drained you see…. accounts must grow and flourish.
Now, on to your question about how much money you could earn?
If you were trading with $3-5K and following my instructions/methodology to the letter, you start at the bottom!
You are the Janitor; sweeping the floors. You are the dirt poor beggar coming to the Hedge Fund manager Mr. Moneybags and asking to trade. He laughs at you and says prove yourself first! You have a very big job to do.
First you have to learn how to make $0.57 here and $0.87 there (5.7 and 8.7 pips) and you need to make $0.92 here and $0.44 there hundreds upon hundreds of times! Yes, you must scalp 20 to 100 times a day.
Then you need to make $1.55 here and $2.35 there and $3.11 here as an intraday trader managing trades over long, long lengths of intraday time.
Then you need to make $5.00 here and $9.28 there (50 and 92.8 pips) as a swing trader holding stuff on hourly and 4 hour charts and sometimes holding for days on end until you almost puke your guts out.
Once you have proven yourself to the trading plan (and only then) are you allowed to grovel for a raise and Mr. Moneybags the Hedge Fund manager (your trading plan) will then let you move to .02 lots per bullet and after a few weeks of this maybe you can climb up one more rung to .03 lots per bullet.
Do you see?
It’s not about the money!
It’s about learning to trade right; doing it right and making $10, $20 and heck, sometimes even an amazing day of $50 (five hundred pips) which most traders would cut their left toe off as a sacrifice to the trading gods in an offering to achieve this, because they know just how truly great it is.
Again, you are hindered like you would not even imagine with just a $1,000 start. If you could start at $5K, then you would have a very good chance.
You would start to learn how to make $50 to $100 a week at .01 lots per bullet. Many weeks later this would double to $100 to $200 a week and when you get to .05 per bullet fired, months later…. look for yourself:
That is $4,699.44 (53.33% gains) with just $9K as starting balance and trading at .05 lots per bullet fired. That is nine thousand pips collected this month. Yes, you see 1,000 pips yesterday and 800 pips the next day. That is an absolute fact.
So, it’s not about how much money you make this day or this week or this month. It’s about the question of whether or not you have lasting power to actually stay the course and be the killer. That is what it is all about.
The person who does this for 3 years is a millionaire. The one who does this for 5-10 years retires.
And now for a tale of horror and mayhem; a tale of death, destruction and woe. There was a man in my trade room this very day who took one of my trade calls.
The call was to be short the USDMXN and he went seriously large on it. I am short .30 lots fired in six bullets. I have a negative drawdown of $300 on the trade. He went at it with a full standard lot!…
… On a $5K account and blew it clean out. When have I ever told someone to trade big? Go big or go home! Not in my entire life. I preach trade small and diversify and never let one trade kill you. He did not listen. This one trade killed him dead. He is crying now. But, alas, it’s his fault. Not mine. He went against everything I have ever preached or taught my entire trading life. How would that make you feel? Borrow $5K or even worse, work for a year to earn, scrimp and save it… and blow it out in 8 hours.
So, (Name Deleted), I do not know you. I don’t know from Adam who you are as a person or what manner of man you are in heart and spirit. I do not know your psychological makeup. All I can possibly say is what I say to everyone.
#1 It has to cost you.
#2 Trading takes a long time to learn; you are attempting brain surgery on a patient that keeps thrashing around on a table all day long and will not hold still.
#3 Diversify and trade small and learn to crawl. It takes so, so long to learn to crawl and one day we actually get to walk. But yeah, we might fall down 1,000 times trying. That did not stop any baby I ever knew. They all did it, suffering the pain.
#4 It’s not easy. It’s really hard work. Hard work never killed anyone, unless they did something stupid and fell off the roof.
#5 Be the turtle. Not the rabbit
Your friend Michael – aka Robinhood