I think many have asked this question before and wonder if and how it is possible. I thought I raise this question since we are in full swing to another great trading year. Short answer is that yes, forex trading can generate you the income you need to make it your primary source.
Having said that it is not as easy as you may want to believe; without going into too much detail just think that if you can accomplish an annual return of 20% (easier read than done on a consistent base) and figure out how much you need to have in order to keep your current life style intact.
Now do the math so you know what size portfolio you need. This is not meant to discourage anyone, just a dose of reality. No need to chase unrealistic dreams here that with 10K you can make it your primary source of income (at least not in my book, there are always exceptions but when I do the math for my well-being I rather be on the safe side!).
Forex is not really that much difference than any business that doesn’t involve inventory. My wife is a top producer in residential real estate. Most of her day is planning, orospecting and doing all the things that lead to a sale or listing. I owned a financial services business same thing always planning, always budgeting, poker player and sports bettor, planning and budgeting.
In most cases when people want to start their own business to earn a full time income they don’t start with $100 and expect in 2 years to compound it into a million, but for some reason new currency speculators don’t think that apply’s to them. If you were to look at almost all successful retail traders you would probably find, most of the day goes towards planning, learning, budgeting and reviewing.
The nice thing about currencies, it’s like real estate and poker. It’s a business with no guarantees that even if you do all the right things you will make a lot of money, but for those times when the trading Gods smile down on you, you’ll make a lot more if you’re prepared. So with that I say Good Luck to all
Gp
My perspective is that as a private individual speculator I should be able to earn more than a 20% return in a year. If not then best turning my money over to a fund. With that said even if i could double my money each year (which i cant) year after year i would have to pay a third in taxes (min) and look at reinvesting at least half of my earnings back into my business so it doesn’t leave alot left behind as an income source. So speculating to me is really about self managing my super fund. However we all know there’s alot more money to be made managing other peoples money and even with this high tech world there are plenty of private proprietary based tading firms out there looking for staff.
So to me the obvious course is lf one is looking to generate an income from the markets is to establish a track record with your own funds then seek employment within the industry. But this in itself could be a 5 to 8 year plan. There is just no way around it. Play this game and you have to be in it for the long term.
Absolutely . Having invested in restaurants early in my business life you’re not kidding,it was tough then and in today’s regulated world almost impossible to make a go of it. Same with boutiques and really most small businesses.
I am not sure why so many enter trading with expectations to make a living with a $1,000 in a short time. Trading is a long-term plan where you spend a few years learning and loosing and then a few more years building up your capital. I think the first decade or more may be spend to get everything moving in the right direction before even thinking about forex trading as a main source of income.
It all boils down to how much capital can sustain you as a forex trader. $10k is big, but not huge. Is it enough to make forex your primary source of income? Yes, in my opinion if a trader is willing to set realistic goals. With such capital, some traders feel they could take unnecessary risks failing to realize that $10k can decrease as quickly as a Stop Watch counts down. The more foolish risks you take, the more it counts down. However, if you take your trades seriously, you could make a decent, but humble income with such capital.
I agree…for 20% Id leave it my super account…and do other things…so what is a realistic return on investment strategy per annum? Id like to think that 40% plus per annum is achievable…Id be interested to hear what others may be expecting or achieving
I agree with several of the previous posters here. One thing to consider is the cost of living where you are located. A trader needs a much bigger account in for example Sweden where I live, than you would need in a low cost country such as Thailand.
You should be able to consistently produce at least 40% gains per year, otherwise it’s not worth the time and trouble, better to let a index fund handle it then.
You also need at least one year’s living costs as a backup to be able to survive bad stretches without having to start deplete your trading account.
So figure out how much money you need to live for a year and consider that to equal 40% of the trading account you need, and remeber you also need the same amount in a separate account as backup.
For most people I’d guess that amount ends up above 100k $, so to be realistic all those people with 1000 or 2000 $ accounts who think they’re gonna make it and be millionaires in a few months… We all know how that ends.
This is not a get rich quick scheme, but it does work if you’re willing to put in several years and all the money you can over those years to build a real account.
what if a trader has an initial investment of $1000 and he has a lucky run of trading a $100 a week profit on the initial capital even with a 1:33 leverage on the capital. would you say he can’t make a living from trading forex and make it his primary source of income? i also suppose that your standard of living and lifestyle also has a major role to play in what becomes a realistic target or a fantasy.
Do the math with $10K. Let’s assume that you can get 40% per year which is not something many can achieve on a consistent base (majority may never get this percentage per year). This would leave you with $4K after one year gross or $333.33 per month or $233.333 with taxes (could be more or less depending where you live).
Hard to imagine where you can make it with $230 per month. Sure, there are countless third-world countries where you could make it, but then again if you live there it will be quite a challenge to cough up $10K and if you live in the developed world would you want to sacrifice that much?
I hope this makes it clear that $10K is not coming close if you want to make forex trading your primary source of income.
Great thread Bear. A lot of hypothetical s. Instead of worrying about what you might earn and trying to base earnings on numbers people pull out of the sky; 1st start with your fixed costs; be detailed and accurate.
Next use your demo account with the balance, leverage and trading strategy you will be using for live trading.
Complete a detailed money management plan that clearly states in the long run based on your trading method your potential earnings. For those of you who think this can only be accomplished by opening an ultra low real account do that along with your demo account with the actual money and leverage you’ll be using.
Depending on you because everyone’s different keep trading, keep learning and keep tweaking. You need to set it up like a business and operate it like one. You will find it’s easier to increase your account with some training that you can find for free and practicing it until it becomes 2nd nature. Then it becomes a little easier. Expenses $5000 k a month verified with receipts or diary. To live the way I want to live I would need $10,000 a month, based on past performance in demo or live this is what I need to do. Trading plan Rules rules one - ten, Money management Rules one through six. I will learn to be patient, disciplined and constant, by recording each days training session.
I believe it was Zig Ziglar who said “Before you can achieve it. . .you have to concieve it.” Don’t start with earnings projections not based in fact; start with expenses based on fact. Wait to base your income projections on your numbers and plan not someone else s. Again just my 2 cents
Gp
There probably is no straight answer to this question.
We all are different, and we should not take someone’s trading concept and apply it to ourselves. Some like to take notes of their trading and review them later some hate it and it should not be made as a must to every trader.
Just like there is no holy grail trading system.
There are many stories out there about people who have started with low capital and have made decent living with it.
Define “make a living”. I personally can live happily with $2000-$3000 a month for example. Whats up with those low % numbers you are mentioning, 20% a year? Why is so unbelievable and unrealistic to think that one can make 20-30% a month?
If you trade with $1000 account with 0.10 lots you need like +10 pips daily to make 20% a month, are you saying that experienced trader cant make +10 pips a day in forex market consistently? lol
Forex can be your main source of income but don’t rely only on one account. What happened on Thursday with CHF pairs is a great lesson to learn by many amateur and professional traders. I mean even if you have a secure SL it won’t trigger because of thousands of pips gap !!!
Well put. There is a lot more cash in money management, education than trading. Never trade for the sake of trading. Build a track record and start managing. It is irrelevant what you start with. As long as you clan buy enough time to trade and produce results, there is no shortage of money that will come at you.
Also most speculators want to trade on demos and then hope to be successful in live trading. This is not possible, in the military you are told any skill learned in non stressful situations cannot be replicated in stressful conditions. This is the reason why military training stresses realism. I cannot imagine a more stressful scenario than day trading.
When I started trading I started with a live so I was always stressed, checking my trades every second until I learned the correct trading ideas. I did lose money to start but it wasn’t till I made my first full year profit that I realised how far I had come. I though didn’t require trading capital I just needed living capital to engage in my trading. In the end my results attracted interest from family, friends and now brokers. In that time I acquired capital that I now trade as well as having opportunity.
So I must agree with Billie. It is possible to day trade for income but you have to first learn under stressful conditions sadly many will never have the time or funds to do that. There is too much focus on trading capital and very little on living capital that will free you up to learn under the correct condition.
If I gave you 100k now could you make me 5k a month? Or even 3k? Either you will take a wild bet to prove me wrong or you will lose most of my cash and then say it is drawdown. This is the mistake Meredith Witney made when she took on a 50m fund because she thought she could trade because she was a top wall street analyst. Like I said the skill can’t be replicated regardless of capital size.
I agree with emeraldorc. There are lots of ways to lose money cosistently in forex and many of them have nothing to do with a persons ability to analyse a chart or place a trade.
In most proffesions and businesses there are successsful people who operate very differently to other successful people in the same field or niche. What they have in common is that they have built up; and learnt to execute; the right skillset for them and the specific environment or niche they operate in… under most; if not all conditions for long periods of time. They also continue to work on improving that skillset.
There is alot of great practical advice in this thread, it may or may not be for you. I always like reading Gp’s replies for example, always very solid, but i would have to get a personality transplant or spend the rest of my life working on myself just to get to the start line to be able to do things the way he does lol ([I]Thats not a criticism Gp, not of you anyway[/I])
I think once you have acquired the specific skillset for your chosen arena you should be able to make a living from it.
