Around 8 years ago I forced myself to trade on the smallest trading account size possible. And it was one of the best decisions I made! Or maybe I was just broke, who knows! I have spent thousands of hours on small accounts that were less than 100 dollars.
While some people were trading six figures, I was out here trading lunch money. But even though ten thousand hours of live trading experience has taught me many important things over the years, I still don’t know for sure what grows a small account the fastest.
I mean, I have made 30% profit within a day, and I have also lost 30% within a day. I have made 100% profit within a year on a relatively bigger account, and I have also shared live setups with Patreon supporters that made profits in the long run. But could I have made profits even faster? I just don’t have the data to tell you that for sure.
So, I decided to make 1000 simulated traders take thousands of trades at the same time!
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These little digital traders have no idea what they’re in for.
I’m going to run multiple tests on these 1000 souls so you and I can see what account growth method, actually grows the account the fastest according to data.
Some of these virtual traders are going to be living their best lives, making it rain digital dollars.
Others… well, let’s just say they’ll be filing for virtual bankruptcy faster than you can say margin call.
I’m going to run 8 different tests, and then an ultimate test at the end, plus an even more important test that will grow the account the fastest.
Think of it like a tournament, but instead of sports teams, we’re putting trading strategies in the ring!
But first, we need a baseline.
We need something we can compare the improvements to.
We can’t brag about our gains if we don’t know what “normal” looks like, right?
So, in the first test, I’m going to make 1000 traders take 1 trade a day, for an entire year straight.
The stock and forex market is usually open from Monday to Friday.
That’s around 250 to 260 trading days in a year if you exclude national holidays as well.
In other words, these 1000 traders are going to take around 260,000 trades in total.
That’s a lot of data we can make use of!
Like, seriously – that’s more trades than a caffeine-powered day trader could take in ten lifetimes!
For our baseline test, I’m going to use a 45% win rate and a 1.5 to 1 reward-risk ratio.
That means the profit will be 1.5% of the starting account, and the risk will be 1% of the starting account.
Pretty basic stuff – nothing fancy here, just the bread and butter of trading.
But why did I use a 1.5 to 1 ratio specifically?
Well, because it’s the best reward-risk ratio according to data we have found in another testing video for trend strategies.
But why am I using the 45% win rate in this simulation?
You see, the break-even win rate with this reward-risk ratio is 40%.
Most average strategies can easily give an above-break-even win rate, like around 45%.
We saw this happen when I tested many different strategies 100 times on the Trading Rush channel.
It’s like being a C+ student – not failing, but definitely not making the honour roll either.
In the first test, we’re giving 1000 traders the bare minimum trading strategy win rate and other rules, so we can create a baseline and see what actually improves things.
So, let’s press the start button and watch these 1000 traders suffer so we can learn something.
Some will make it rain, some will make it pain, but all of them will help us learn what really works in this crazy market!
What you’re looking at is the account balance of 1000 traders getting plotted on a chart as they take 1 trade a day.
I have given them 100 dollars to trade with.
The messy grey lines are each trader’s balance doing its own thing.
The green line?
That’s our superstar trader with the highest profit.
He is the luckiest of them all.
He is going to come to your house with his Ferrari and sell you his ten thousand dollar courses.
The red line is, well, let’s just say that trader might want to consider a different career.
He is doing the worst out of all.
But the important line here is the blue line – that’s the median of all traders.
It gives you the true “middle” performance.
Think of it as the “reality check” line.
This is what we’re planning to beat, so keep your eyes on this bad boy.
So, now that we have our baseline (aka our “this is what normal looks like” test), we can start messing with the rules to see what actually grows the account fastest.
Let’s start with one of the simplest improvements possible – in test 2, I’m going to make 1000 traders take 2 trades a day instead of 1.
Everything else stays the same as before.
See this dashed grey line here?
That’s the blue line from our first test, hanging around like a ghost from trading past.
I’ve designed the simulation to show us this line so we can easily compare if our new test is actually doing better.
And would you look at that – test 2’s blue middle line is actually higher than the first test!
Our traders are probably feeling pretty smug right about now.
But in test 3, if I make the 1000 traders take 3 trades a day, do you think the profit will double or triple, or quadruple?
Let’s torture these poor souls with even more trades and find out!
Okay, so based on data, the easiest way to multiply your trading profit, is to look at the current number of trades you take, and think about ways you can multiply that.
Because your trading profit is directly tied to the number of trades you take in a given time period.
For example, according to the simplest solution of growing the account, if you want to make 3 times more profit this year, then you will need to figure out ways to take 3 times more trades.
But here’s the thing – taking more trades is not always an option.
Maybe your trading strategy is pickier.
Maybe your trading strategy doesn’t give a lot of trading opportunities frequently.
What if you understand that trading quality is also important?
What if we just can’t trade more?
That’s why in the fourth test I’m going to show you something really interesting.
Watch what happens when I tell the 1000 traders to take 1 trade, but risk 2% of the starting balance this time.
They’re not taking more trades like before.
But look what’s happening – that profit made with fewer trades is the same as taking twice as many trades!
Pretty interesting, right?
This means simply increasing the risk by 2 times gives the same profit result as taking twice as many trades.
So, if you have an excellent trading strategy, but it’s too shy and doesn’t give that many trading opportunities frequently, you can get the missed profit by simply increasing the risk per trade.
If your strategy is excellent, the win rate is most likely good.
So, increasing the risk to something like 2% is not increasing the overall risk that much.
In other words, the probability of blowing up your account because of 1% more risk should still be relatively low – it’s not like we’re going full YOLO here!
Speaking of good win rates, multiple trading strategies I’ve tested 100 times on the Trading Rush channel gave a win rate of around 50% with a 1.5 to 1 reward-risk ratio.
So far, we’ve been using a 45% win rate, which is lower than that – like trading with one hand tied behind our back!
So, in the next test, let’s see if a 5% higher win rate grows the account faster than the other things we’ve tried so far.
I’m going to reset all the settings back to the baseline test and only increase the win rate by 5 points, from 45% to 50%.
Do you think the 5th test will make more profit than the previous tests?
I think you will be really surprised by this one.
Look at that!
Even though the win rate increased, the profit was the same as it was with a lower win rate.
Kind of surprising, right?
I bet a lot of us think a high win rate is always good – like you always need the win rate to be high or something.
But look at this – a lower win rate can still achieve the same results!
Here’s what’s really crazy: a 50% win rate with 1% risk per trade gives the same profit results as a 45% win rate that’s using a 2% risk per trade.
If you’re sitting there thinking “2% risk? That’s scarier than trading crypto on a Monday morning!” then look at this chart.
A 50% win rate with 1% risk gave the same profit as a 45% win rate that took 2 times more trades with only 1% risk.
What’s the data telling us here?
Well, if you’re a beginner trader struggling to get a high win rate and want to grow your account fast, it can be done without that perfect win rate everyone’s obsessing over.
It’s like sending text messages – you don’t need perfect spelling and grammar in every single message to get your point across.
A few typos here and there won’t stop people from understanding what you mean as long as the important parts are clear!
But what if you’re decent at trading and have a strategy more reliable than your grandma’s cookie recipe?
Well, in the 6th test, let’s see if a 10-point increase in win rate can make more profit.
The win rate goes from 45% to 55%, while everything else stays the same as our first baseline test.
Look at that!
Now this is interesting – a 10% higher win rate is making the same profit as a 10% lower win rate strategy that was either trading 3 times more or was risking 3% per trade.
Overall, a higher win rate with 1% risk is always better, of course.
But here’s the thing – it’s not the only thing that can grow your account fast.
It’s like finding out there are multiple paths to the top of the mountain, and they all work!
But I’m going to show something even more interesting.
So far, I’ve been using the starting account balance to make decisions.
I told 1000 traders to risk 1% of the starting account balance.
But in the 7th test, I’m going to make them use the “stage-based risk.”
This is what I used to do when I was trading on smaller accounts.
Basically, every time the account grew by a certain percentage, I used that account balance to make the next decisions.
For example, if a 1000-dollar account grows by 30% (now $1,300), then I will risk 1% of this new bigger account balance.
If it grows by another 30%, then I will risk 1% of this new bigger account instead of the starting balance.
It’s like leveling up in a video game – as you get stronger, you take on bigger challenges!
Let’s see if this stage-based risk method grows the account faster than the other things we’ve tried.
And… plot twist!
Looks like it’s making pretty much the same profit as the first baseline test.
Talk about a letdown!
Why did this happen?
Well, because the 30% profit with 1% risk per trade and 1 trade a day was barely reached until the very end of the year.
The stage-based risk never got a chance to do its thing because these traders were making money slower than a sloth!
So, maybe this might not be the best thing to grow the account fast.
But let’s use the multi-millionaire risk management method in the 8th test.
This is where things get spicy!
You see, Richard Dennis, who had turned 5000 dollars into 100 million dollars, taught a group of random people how to trade successfully in the 1980s.
These random traders were called the “Turtle Traders” – and boy, did they crush it!
In a few years, these turtle traders ended up making more than 175 million dollars in total.
One of the risk management rules they were taught to trade successfully was risking a percentage of the current account balance.
For example, if your current balance is 1000, then risk 1% of that.
If it’s 1450, then risk 1% of that.
Whatever the account balance is right now, risk 1% of that.
I got a whole video on this story. I even tested this turtle risk management method in another video, and it did exceptionally well.
This is also the method I use right now.
So, let’s see if the turtle risk method grows the account faster.
And… it started at the baseline profit.
Hmm, it still looks like the baseline profit.
It’s still not making much profit.
It’s barely making more profit than the baseline.
Well, what the heck is going on here?
Why did the stage-based risk method and this current balance turtle method didn’t improve things?
Well, here’s a little important part!
The stage-based method and the current balance method are both compounding methods.
And when does compounding work the best?
That’s right! When you increase the number of trades.
It’s like having a snowball – it only gets bigger when you keep rolling it!
That’s why in the ultimate test, we’re going to stack all the methods we’ve seen on top of each other.
Like building the ultimate trading sandwich!
So far, we’ve been testing the growth methods individually.
But watch what happens when we combine multiple fast account growth strategies at the same time.
Here’s our baseline – 1000 traders with a 45% win rate, 1 trade a day, 1.5 to 1 reward risk ratio, and 1% risk of the starting account balance.
Pretty basic stuff.
Let’s add on top of these rules.
Now we’ve got 1000 traders taking 2 trades a day.
Look at that nice bump in profit!
Already getting spicy!
On top of this, let’s increase the risk from 1% to 2%.
This is actually pretty standard. So we’re not doing something crazy here, no YOLO trading!
And would you look at that profit – excellent!
Now let’s add a good win rate strategy that gives around 55% win rate.
I’ve tested many different trading strategies 100 times on the Trading Rush channel and website.
If you want to see which strategies got around a 55% win rate?
Check out the Trading Rush Score on the Official Trading Rush website.
Fun fact: the highest win rate a strategy got was around 60%, so we’re not even maxing out the win rate here!
When we stack this good win rate on top of our other growth methods, the profit already looks fantastic!
Better than all our previous individual tests.
Let’s top it off with the Turtle Traders’ risk management rule.
Instead of using the initial account balance, our 1000 traders are now risking 2% of their current balance.
And… Look at that amazing exponential growth when all these account growth rules are stacked together!
It’s like watching a rocket take off!
The median profit after applying all these growth methods was around 27 times higher than the baseline profit we saw in the first test.
That’s amazing!
Now, I know the goal of the video is to show data-backed methods that grow the account fast.
And to many people, it can mean growing it within a few days.
But I want to show you something really interesting and important – it’s like finding a hidden treasure in plain sight!
When you increase the time horizon, the rate at which the profit grows in dollar amount gets really, really, REALLY fast near the end.
For example, this is the profit line of year 1.
Let’s see how far up the new blue line goes when we extend the time horizon to 2 years.
At first, the new blue line moves pretty much exactly like the first one.
Well, that’s because it’s doing exactly the same thing just for a longer duration – no surprises there!
But do you think the year 2 profit will be doubled because of the double time horizon?
Or do you think it will be much higher?
Well, hold onto your trading charts because this might shock you – the year 2 profit is 32 times higher than the year 1.
Not 2 or 3 times, but 32 times higher!
That’s like expecting to double your money and instead getting enough to buy a whole house!
How is year 2 profit so high even though the 1000 traders are trading the exact same way as year 1?
Well, that’s the power of compounding.
It’s not magic but feels like magic when you give it time.
If we compare the profits over the 2-year time horizon, then we see that the growth methods when combined made a profit eight hundred and 77 times higher than the baseline test.
When we compared year 1 profits, the growth method profit was only 27 times higher than the baseline.
If we increase the time horizon even more, the difference in profit is going to get even crazier.
This 877 times higher profit is already sounding unrealistic.
But that’s just what the data of compounding vs not compounding looks like in the long run.
In the Trading Rush Foundation Series I have made for Patreon supporters, I have a whole episode just focused on why you don’t need to try hard to make big profits because of this wonderful principle.
Like I said before, compounding, especially with all the growth rules we have seen so far, is like a snowball rolling down a hill – it starts small, but by the time it reaches the bottom, it’s massive!
So, here are the final growth rules.
If I was struggling to get a high win rate, then I would trade more to grow the account faster.
If I couldn’t take more trades because the strategy doesn’t give many trading opportunities frequently, then increasing the risk percentage per trade can grow the account faster.
But I won’t increase the risk to something crazy.
Because I don’t want to increase the risk of blowing up the account too much.
I would figure out ways to increase the win rate by 5 to 10%.
I know this is difficult to do as a beginner trader.
But doing simple things like analyzing multiple timeframes, and understanding the choppy markets, or other markets where one should avoid trading has massively improved the quality of trades, which then improved my win rate as a result.
I have a bunch of videos on that topic.
Check them out.
Whether I use a good win rate or an average win rate doesn’t matter that much.
What matters more is risking percentage of the current account balance instead of the starting account balance.
It not only increases the profit but also reduces the probability of blowing up the account.
We literally have data saying so.
But if you remember previous tests, this risk management method really shines when the number of trades is high.
So, if I can’t take more trades, simply increasing the time horizon will achieve the same profit results, just on a longer time horizon.
The rate of profit made in dollar amount keeps on increasing with time according to data.
The more number of these points I can do, the faster the account will grow according to the data.
If I do all the points, then the account will grow the fastest as seen in the ultimate test!
Those are all the main things I’ve learned about growing small accounts fast while trading for around 8 years now.
But time for a reality check.
Remember that to compare different results properly, our experiments assumed the market was consistently good for a year.
In real life, the market has bad periods where trading is about as fun as being stuck in traffic and wanting to pee.
During these rough patches, the win rate can drop to break-even and your profit graph can become flat.
So in real trading, all these rules will still work, just with more realistic gains – think 50% profit instead of 50000%.
I mean, I’ve seen some crazy people pull off 50000% profit, but they probably also won lottery tickets while being struck by lightning… twice!
You’ll have a much higher probability of growing your account with realistic goals instead of trying to become the next Warren Buffett overnight.
Also, in the experiments, since I was mentioning taking trades a day, it might sound like I was talking about day trading.
Like, day trading is the only way to grow the account or something.
But it’s not!
Taking more trades a day can also be applied to swing trading, where one takes more trades and holds positions for multiple days or weeks.
Think of it like grocery shopping – you can buy multiple items in one trip, but you don’t have to eat them all that same day!
According to data, if you want to grow the account, one of the things that matters is increasing the quantity of trades you take.
But I also want to make one thing very clear – taking more trades doesn’t mean taking garbage trades, or force trading, or overtrading.
I learned this the hard way!
When I was trading on small accounts, one of the ways I lost most of the account was due to overtrading in garbage market conditions.
It was like trying to fish in a puddle – there’s just nothing good there!
My account grew with more stability when I stopped trading when the market was not worth trading.
I know taking more trades and not trading garbage trades can sound like opposite things.
But to grow the account faster with stability, the goal is to take as many good quality trades as the market gives you.
Good Quantity with Good Quality!
Now you know which method has the biggest impact on your profits, and which one grows the account the fastest!
I hope you learned something by looking at all this data!
I definitely did!
That’s all!