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Do you have a forex deposit plan?
Written by: PaxForex analytics dept - Thursday, 21 May 2015 0 comments
Most may have never heard of it or have never considered it, but in order to become a truly successful trader you need more than a profitable trading strategy, a stringent risk management approach and a solid forex broker. You will need to have patience and discipline as well as time and capital. The best trading strategy will do you no good if you do not have adequate capital in your trading account. Remember that money makes money and therefore a forex deposit plan is very important.
What is a forex deposit plan? It is very simple. A forex deposit plan is a plan for when you make deposits into your trading accountand how much you deposit. Now, to many this may be something unheard of as most new forex traders and existing ones make a very big mistake in thinking that all they should do or need to do is make one single deposit and start trading. This is one big reason why many forex traders end up failing.
Sure, the idea is to make money trading forex and to create income. Forex traders aim to grow the existingcapital and reinvest the earned profits. Two things
need to be considered here; most new forex traders either do not have sufficient capital to start with or decide not to make a meaningful deposit. This means that they will be underfunded which creates a big range of problems from overtrading to frustration.
Successful and professional traders may generate roughly 20% per annum, some more and some less, and they do so on a consistent base. Now imagine that you will enter this exclusive group of people and that you will be able to grow your account by that amount. A small deposit of let’s say $1,000 will generate $200 per year. This will lead to frustrated traders who seek higher returns. You can try to do the math of how much money you need to have in order to live off of your trading income.
A forex deposit plan is needed to grow the account. For example you make your initial deposit of $1,000 and then each month you decide to make another deposit. It does not matter if you deposit $100, $200, $500 or $1,000 every month as long as you will make the same deposit every month consistently. Over time the 20% annual return will amount to sufficient return and once the earning match the deposit you can decide if you want to keep depositing or if you prefer to quit and just reinvest the earnings. In either scenario you need to have a forex deposit plan.