Most traders enter the financial markets in order to find another source of income or even to replace their main source of income and escape their daily work routine. Thus, the biggest enemy of potential traders becomes the lack of capital with which to trade in the financial markets. Many traders who already have some experience behind them, do not have enough capital to be able to make the profits they want. Novice traders, on the other hand, tend to underestimate low capital because they are unaware of the risks involved in trading and falsely regard trading as an easy path to high returns.
Small account, small profits
It is simply not possible to succeed in trading with a small account. More experienced traders with insufficient capital are forced to make compromises that can negatively affect their results and psychological well-being. For novice traders, underestimating the risks also leads to unnecessary losses, due to which novice traders fail to move forward in trading and either end their trading efforts prematurely or simply lose all the money they have invested in trading.
The importance of adequate capital for success
For example, imagine a trader who already has experience with concepts such as risk management, money management, etc. He is able to open a $2,000 account and, as a responsible trader, will risk 1% of his capital per trade, which is $20, and target a profit of $50 (2.5%). However, such a profit is not motivating enough and after a few weeks of disciplined trading, the trader very often realizes that things are slow and that such small money does not make sense. Strict rules go aside and trading becomes more of a gamble than a prudent business.
In fact, if a trader wants to achieve a return of at least $2,000 per month, he will have to make 40 profitable trades in a row, which amounts to 2 profitable trades per day. At first glance, this does not sound too weird, but in reality it is unrealistic. 40 profitable trades in a row cannot be made because we have to count on losses. This of course leads to the need to execute a much larger number of trades, which in turn increases the probability of losses, putting the trader with a small account in a vicious circle.
Modern prop trading offers a solution
FTMO, as one of the leaders in the prop trading market, offers all potential traders the opportunity to trade on an account much larger than they could normally afford. For traders who are able to achieve consistent results and are no strangers to proper money management and risk management, FTMO has accounts available in a size that suits them.
Much higher potential profits
Clients who choose to use the services of a prop trading company like FTMO have a demo account with a much larger volume of funds to trade with. Those who go through the evaluation process then have the option of trading on the FTMO Account and can be rewarded for their performance with up to 90% of the simulated profits they generate, without any risk of losing their own capital.
For the same percentage of risk, this allows them to make much higher profits that would be virtually unavailable to them with small accounts. For example, a trader with an account size of $100,000, and the same risk/return parameters per trade as in the previous example, can earn up to $2,500 on each trade. The profit and loss percentages remain the same, which increases the attractiveness and motivation of the trader.
A lot fewer mistakes
A larger account with a prop trading firm means that a trader can behave in a more disciplined manner and does not need to make a large number of trades at any cost to make the profit he wants. Overtrading is in fact the biggest nemesis of traders who feel that the more trades they execute, the better their results will be.
In reality, it ends up doing the opposite because in most cases, traders start making mistakes after a series of losses and lose even more in an attempt to get back to profit. Fewer trades in a large account at modern prop trading firms then mean less risk of making a mistake which lead to unnecessary losses and increasing trader stress.
Positive effect on the trader’s mental state
Psychology plays a big role in trading and mental well-being is one of the foundations of success in trading. The fact that a trader on a large account does not have to execute a large number of trades at any cost and his profitable trades make much more sense from a financial point of view, significantly reduces stress and most of the psychological burden. This can ultimately have a very positive effect on his results.
How can FTMO help you?
If you are serious about investing and trading, a small trading account is unlikely to meet your expectations because it will not offer you enough attractive and relevant opportunities in the markets. As a leader in the modern prop trading market, FTMO offers skilled traders the opportunity to demonstrate their trading skills and earn real rewards from trading on a demo FTMO Account with up to $200,000.
After successfully completing the Evaluation Process, FTMO will provide you with an FTMO Account with a balance of up to $200,000 in fictitious funds. While the FTMO Challenge, Verification, and FTMO Account all operate in a simulated environment using fictitious funds, the data displayed is based on real market data. Despite trading being simulated, you can earn a real financial Reward of up to 90% of your simulated profits based on your skills.
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