3 Forex Trading Hacks To Boost Profitability And Shorten The Path To Achieving Your Financial Goals

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Before you start trading, either by making the trading decisions yourself following a strategy or having someone else make the decisions by using signals, there are some things you need to take into consideration.

Remember, the way I think about Forex trading, there are 3 goals we are trying to accomplish:

- - Accumulate Wealth Faster
  - Create Multiple Income Streams
  - Secure Your Financial Future

This is not some gimmick. This is serious business. And that is why you should actually treat this like a BUSINESS.

Every successful business has a business plan.

Since everyone is different, this is going to take some planning and orientation to your particular situation. In short, your business plan and how you move forward to reach your goals is unique to each individual.

However, there are things you should take into consideration and understand BEFORE you build your initial business plan.

The Two-Step Process To Achieve Life-Changing Profits

Most people want to get involved in Forex trading and immediately achieve their profit goals. They have an idea of how much money they want (or need) to make… and they want to start making it now, not later.

But the problem is, they usually don’t have enough investment capital to even come close to their profit goals.

The truth is, most at-home traders are underfunded for their profit goals.

It is very important to give yourself time to build up your investment capital in your trading account before you start focusing on your profit goals. Depending on how much you have to start with, it is going to take some time to build up to the proper account size for your goals.

If you think you are going to turn $100 into $50,000 in a year, you are setting yourself up for failure. This kind of thinking is just not realistic.

Therefore, achieving your profit goals is going to be a 2 step process:

Step1: Systematically build your account balance to the correct size for your goals.

Step 2: Start achieving your profit goals and make significant money that matters.

For most of us, it takes time to build up our investment capital to the size where our yearly potential profits make the impact we desire. But once you achieve the proper capital level for your goals, you can start designating your profits to other areas.

- - You can reach the point where you can start taking money out of the market and use it to improve your lives
  - Or, you can use a portion of your profits to start more income streams, greatly increasing your profit potential

No matter how long it takes… the benefits are worth the wait.

I believe Forex trading can accumulate wealth faster compared to other markets. But that does not mean it is some kind of “magic bullet” that is going to make you rich overnight.

And if you want to reach your overall goals, you’re still going to have to approach your trading in a professional and controlled manner… and be PATIENT!

In the beginning, your focus should be on building your investment capital… not “making money”.

So, depending on where you are starting out, be prepared to put in some time in the beginning where you are not going to access any of your profits. Grow your account to the proper level first… and then you will be able to take out the desired profits later to use in other ways.

So, understand where you are in the process, and take that into consideration.

Let’s look at one hack I do when I start a new trading account...

Hack 1: The Training Wheels Protocol

The training wheels protocol is a little trick I use to get my trading accounts off to a fast start while simultaneously reducing the impact of losing trades in the beginning.

Nobody likes losing trades, no matter when they happen. But the truth is, there WILL be losing trades… so you better get used to the idea.

But I’ve found a little trick I like to use when I am starting a new account. I call this The Training Wheels Protocol.

Remember back when you were learning to ride a bike? (A considerable time ago for me). Many people get started by using training wheels. These little wheels on the side of the bike keep you upright until you can learn how to ride without falling over.

We are going to use the same concept here.

You see, I’ve found it easier to absorb losses emotionally when my losses come from PROFITS and not my starting capital.

When you are getting started, you need to fund your account. In the beginning this is money you earned in a way other than trading.

Let’s say you fund your account with $2,000 and the first trade you take is a loss. Not only does this feel like a rocky start… but you’ve actually lost money you once held in your hand. OUCH.

But let’s say you have been trading for a while and have grown your $2,000 starting balance up to $2,700. And then you suffer a loss. If you are using 5% of your account, that is a $135 loss taking your account down to $2,565.

But that loss came from your trading profits, not your initial investment. And even with the loss, you are PROFITABLE on the account overall. I find this makes dealing with the emotions of losing easier to stomach.

Basically, once you build a PROFIT BUFFER over your initial investment, it is easier to deal with losses and continue to trade by following the rules over the long term.

So, here is what I propose…

If you take a loss in the beginning of your trading, REPLENISH the account and bring it back to the starting balance. Continue to do this until the trading creates a PROFIT BUFFER.

If you want to take this approach you need to plan for this in the beginning by holding a little of your starting capital back, dedicated to replenishing losses.

I find this approach helps me deal with starting a new account. And it also helps me build the profit buffer faster.

Here is what I mean…

Since we are risking 5% per trade, if we have a few losses in the beginning the account balance is lower. This means the amount risked on the next trade is lower than the first. It also means the profits will be lower in case of a winning trade.

So, it could take multiple winning trades to make up for one losing trade.

I would prefer to have a winning trade with the same amount of money risked as the trades that already lost. That way, if we do get a nice win, or a win that reaches the target… the profits are more substantial and build a bigger profit buffer.

Once we have a profit buffer, the money risked on trades is coming from our winnings, not our investment money. And at this point, I just continue to trade with the knowledge that there will be ups and downs in my account. But as long as the balance does not dip below my starting investment, I don’t need to add any additional money.

Unless I want to… which we will go over later.

But first, let’s talk about why you don’t want to take money out of your accounts too early.

Hack 2: Tap Into The Power Of Compound Interest

Remember, we are looking at Forex trading as a way of accumulating wealth. This puts us into an investor mindset and prepares us for more long term trading. We are not trying to make money every day, week or month.

Rather, we are trying to grow our accounts to higher and higher levels by trading a strategy that makes money over time by being consistent and giving the approach time.

Therefore, it is very important you understand how COMPOUND INTEREST helps you grow your wealth faster.

How Compound Interest Works

Here is a simple definition of compound interest:

Compound interest – meaning that the interest you earn each year is added to your principal, so that the balance doesn’t merely grow, it grows at an increasing rate – is one of the most useful concepts in finance.

– moneychimp.com

Let’s show how compound interest works with an example that keeps the numbers simple:

- - - Initial Investment: $1,000
    - Interest Rate: 10%
    - Number Of Years: 30

3 Forex Trading Hacks To Boost Profitability

Here is how compound interest works…

If you invest $1,000 and get a 10% yearly return on your investment that would be $100 profit at the end of the year.

If you took out your profits every year you would have only profited $3,000 ($100 a year for 30 years).

However, if you don’t take your profits out, but “reinvest” them for the next year, you can get significantly more profits.

In the above case, the next year starts with $1,100. So the same 10% return is now $110 in profit.

Same return on your investment, but MORE profits.

As time goes on, adding your gains to the starting balance for the next year dramatically increases your profit potential. As you can see from the chart, the initial $1,000 investment went up to $17,449. That is $16,449 in profits.

Same interest rate of 10% per year. But taking you profit out every year only yields $3,000 in profit. Keeping your money in and tapping into the power of compound interest yields $16,449. Which do you want?

So, how to get compound interest?

It’s simple. Make an investment that produces gains, and don’t take your profits out over the long term. You profit potential increases exponentially as your account continues to grow.

See? Thinking like an investor and taking a long term view pays off big time.

But there is a way to increase your profit potential even more.

Hack 3: Build Your Investment Capital Faster

A lot of traders want to set up their trading account with a small amount of investment capital and then never add to their accounts again. They want all the future profits on the account to come from the trading.

And depending on how much money you have to start with, this might be a way to go.

But if you are starting with a smaller amount of investment capital, it is a better option to ADD to your accounts on a schedule. Systematically adding to your accounts helps grow them a lot faster so you can reach your profit goals sooner.

Here is an example…

Let’s say you want to start with a $2000 account. And let’s say for argument’s sake you trade for 5 years with an average of 30% gains per year without taking any money out.

This is just a very simple example, and as you already know we can do a lot better than this. But I just want to make a point.

Here is what would happen due to compounding…

You start with $2000 and end up with $7,425.86 after 5 years. Not bad.

But let’s see what happens if you start with $2000 and add just $100 a month to your account with the same 30% gains per year for 5 years.

You start with the same $2000, but end up with $20,040.98 after 5 years. That is a tremendous improvement!

Instead of $5,425 earned from your trading, you got $12,040… more than DOUBLE.

By systematically adding just a small amount per month, and then making gains on these additions as well, you can greatly increase the speed of your account growth.

I personally look at each of my trading accounts as separate and independent businesses. And in order for my businesses to grow faster, I continue to invest in them.

To get the business to a level where the profits alone are substantial, I make additions to my accounts when possible and don’t leave all the gains to just the trading.

And as you can see, even small, systematic additions can really add up over time.

The additions help my accounts grow faster, and when I get good gains through trading it turns out to be a lot more money.

You don’t have to do this, of course. But it is something to think about that can help you accumulate wealth even faster.

And the good news is, making additions to your accounts does not have to be a “forever” thing. As a matter of fact, when your account reaches a certain amount, you don’t need to continue adding money.

In Conclusion

I truly want you to succeed. And the most challenging time is when you are getting started. That is when everything is new and each event is magnified emotionally. Losses feel really bad and winners are extremely exciting.

The longer you trade, the less powerful these emotions become and the easier it is to keep trading in the background of your lives. At this point for me, trading is actually quite boring. But that is exactly what it is supposed to be… something I do in the background of my life to accumulate wealth faster than other investment methods.

The Training Wheels Protocol is a nice trick to use to get through the beginning stages of your trading, where your confidence level is not extremely high.

By adopting the Training Wheels Protocol you are PREPARING for losing trades in the beginning. By being prepared, you are less shocked when and if it happens. If you plan for your first trades to be losers, and they are and you have to add money… your trading experience is still according to plan.

If you start your trading with winners and never dip below your initial investment… great. You’ll never have to replenish your account. But I feel it is better to hope for the best and plan for the worst.

I would highly recommend taking this approach when you are just getting started.

And if you want to see your accounts grow faster, and increase your profit potential even more, I suggest making a schedule to add to your accounts when possible. The goal is to get your account to the proper size for reaching your profit goals as fast as possible.

Once you reach this level, you can start another “business”, or simply let your accounts grow through the trading alone and the power of compounding.

The Training Wheels Protocol and adding to your account systematically are optional hacks. But the one thing you don’t want to do is start taking money out too early. If you do, you’ll miss out on the power of compounding.

Edward Lomax