Mon, Nov 28, 2022

Most traders aspire to turn their few thousand dollars into a million or so. Armed with compounding spreadsheets, perhaps a Blackbox EA robot and an optimistic smile we sail to the millionaire’s club.  However, since most retail level traders don’t actually understand how the interbank market structure or the procedure broker’s use to fill their orders, they often don’t understand why that dream will unlikely to come true. 

forex large account

Is it Hard to Trade with Large Forex Account?

The Forex market works the same way your local stock exchange or street market! Someone has to buy your shorts and someone has to cover sell you before your long orders gets filled.  Foreign exchange market has the most liquidity compared to any other international market. However, most liquidity is focused on few major pairs. Try putting an order with 50 standard lots to trade a super exotic pair like USD vs. Polish Zloty, or USDPLN. You will probably end up moving the market price few pips!

What is a Big Account?

When we talk about a “big account” in fact there is no absolute definition on this in terms of how much the amounts should be, though when trading forex, it is generally accepted that a big account, or large account, is one which features a minimum deposit that is substantially higher than average.

This average for the sector is usually between $0-$1000 with the most common being around $100 -$200. Beyond this level, you may well be getting into big account territory.

It is another ball game again if you are an institutional or professional trader (as classified by ESMA regulation). In these cases, you may receive many additional benefits though minimum deposits here running as high as $500,000 for this tier of professional trader is not uncommon.

What is the best leverage to use when trading with a $100 Forex account?

What is the best leverage for $100? The average starting balance for a Forex trader is higher. If you decide to start with $100, then I recommend taking the maximum leverage of 1:500, while trading with the minimum lot and in a very limited amount. Open more than one position with caution.

What lot size is good for $1000 forex account? 

For an account size of $1,000, risking 1% with a stop loss of 50 PIPS, the appropriate lot size trading EURUSD is 2 micro lots.

Because by the time your broker will unload your order to buyers (or sellers, depending on you bought or sold) around the world, price will have to go down (or up). The reason should be covered in your Economics 101. The price is just equilibrium of supply and demand. When you increase supply the price goes down (when you short) and when you increase demand (when you buy or go long) then price will go up. Since market liquidity is low on exotic pairs, there aren’t many buyers or sellers with large enough liquidity to cover your order. Hence, you create the excess demand or supply in the marketplace when you place big enough orders. This is true in every capitalist, open market. However, because the highly efficient nature of Forex market as it is traded electronically, your orders instantly changes price.

Capital Gains is the key word

People make the mistake of considering dollar values. As you call it BIG money. Define BIG money or LITTLE money. Everyone has a different understanding of these descriptions, regardless of how much you have you should attempt to retain a single mindset. Think of capital gains in way of percentages (%) Whether you have $1000 or $1,000,000 you should be wanting to make perhaps 2% per week for example, as opposed to a particular dollar value.

Now, let us get back to why your dream of turning few thousand dollars into a billion will probably not happen, AKA why it is difficult to make good return on investment with large amount of money in Forex. When you are going to trade a big account, even trading the EURUSD will be difficult because your orders will create huge demand and supply swings in the market. By the time your orders will get filled, market price would have moved up or down enough that there is no point entering the market at all! That’s why Forex traders often use teams of traders who will use verity of advanced methods to break down large orders and try to trade smaller “chunks.” If you have been trading with an ECN broker who lets you see Level II data, you might have noticed that you can actually see where and what price other traders are willing to trade how many lots and so on. Imagine someone watching your orders on Level II or even at the liquidity provider’s end to “ride” on your large order and get out before market has absorbed it.

Once you start trade with large accounts or trade for big banks who unload millions of dollars of international trade financing (someone has to exchange dollar to Yuan for those ship full of rice or iPods!) it becomes more like a game of cat and mouse.

Your precious little custom indicators and “system” will simply fail to make a dime of profit if you trade big enough because your orders will start to move the market itself. And that is why most retail level traders will not be able to keep making enough profit to multiply their accounts as it will get lot harder to yield any profit with large enough accounts.

However, the sums we are discussing here are so large that 99% of retail traders shouldn’t even bother about the consequence described here. Because most brokers will be able to accommodate your accounts up to 50 million USD. Unless you are Warren Buffett himself and reading this, you shouldn’t worry at all. Keep trading and if your broker is having trouble executing your “large enough” orders, well cheers, you have made it to the millionaire’s club anyway!

Large accounts are mentally draining and exhausting. The more my account was growing, the more distressed I got. Sure, risk management is there to avoid you blowing away your account. But this is a psychological battle.

Having a nice financial cushion in the bank that covers your living expenses for the next 6 to 12 months will add another safety net that takes pressure off you and your trading, so you can focus on only one thing: improving as a trader as best you can, and the money will come along the way. Trust me.

Treat your trading like a business, not like a trip to the casino, and you will do just fine.


  • Hits: 11752