# How a $500 Account Compounds Through Proper Risk Management

Most retail traders never sit down to do the math. Here's what actually happens when you get disciplined about position sizing and risk-reward ratios.

Start with a $500 trading account. Set your lot size at 0.05 and commit to risking exactly $25 per trade—that's 5% of your capital. For every winning trade, you target a $50 gain, which gives you a clean 1:2 risk-to-reward ratio.

Now run the numbers across 20 trades. Say you nail 10 winners and take 10 losses (a realistic 50% win rate). Your math looks like this: those 10 losing trades cost you $250. Your 10 winning trades bring in $500. After expenses, you're up $250.

That means your account doesn't just survive—it nearly doubles. And you're doing this on a coin flip. A 50% strike rate isn't even impressive. Most traders either don't track their actual win percentage or refuse to believe these numbers work.

The secret? It's not about being right more often. It's about what you make when you're wrong versus what you make when you're right.