Hello,
So what initial capital would you need to make $10,000 a month along with building up your capital with compound interest , lets say you make 90 pips perweek so that 320 pips a months with proper risk management?
thank for you time and help;)
just a little toying around…
say i would need 10k a month as salary…
say i expect to trade very nicely, making a 5% a month ROI month after month on avarage…
say half i would like to use to compound the account, initially, and to couter the inevitable inflation, thus keeping my 10k salaries value in the future by it…
i would then think i would have 2.5% =10k
so, i would need about 400k capital to go after this result, without too large pressure on me, room to have some mistake, and without the need to unnecessery gambling.
PS: it is clear that the more capital, the easier to reach this result. it is also basic that the 5%/mo ROI on avarage is rahter high, part because it is more than most available investment would return with acceptable risk, part because trading might not be a winner every months.
of course, it is my private take, and such i am not saying in any way i am the best to estimate your returns, or judge your system. or anyone’s.
I would say that it depends on how many times a month you trade. Say you trade once a day and you risk 2% Lets say you win 50% of the time and you break even 25% and you lose 25%
your monthly % would be around 10% so if you had a 100k account you could realistically earn 10k a month if you wanted to compound some profit into capital you could do it with say 110k the 10% of the additional 10k would be around 1k a month which could be added to the capital and every month it would grow your account.
Depending on your trading style 10% a month is very conservative and of course you would risk less as your account grows.
The important first step is learn to trade and consitantly profit then you can work on growing your account.
You haven’t furnished enough information for a definitive answer.
Depending on how you trade, the answer could be anywhere from $10,000 to $500,000.
So, I’ll make some assumptions, and give you a range of answers.
Let’s say the following describes one month of your trading, and let’s say that every month is the same:
[ul]
[li]you trade mini-lots of currency pairs having the USD as cross-currency (that is, pairs of the form XXX/USD)
[/li]
[li]all trades have the same TP and the same SL, and in every case TP = SL (that is, R/R = 1)
[/li]
[li]you have x-number of NET winning trades per month (that is, number of winners - number of losers = x)
[/li]
[li]you make 320 (net) pips profit per month, and this produces a net dollar-profit of $10,000
[/li]
[li]your risk on each trade is 2% of your account balance
[/li][/ul]
Let’s run through one set of numbers.
Each month, 320 net pips generate a $10,000 profit. Therefore, each net pip generates $31.25 in profit. To earn $31.25 per pip, you have to trade 32 mini-lots, which yields $32 per pip, which is $10,240 profit per month on 320 pips profit.
Next, let’s say that you have 10 net winning trades per month. This could be the net result of 100 trades placed, with 55 winners and 45 losers, or any other combination of wins and losses.
Ten winning trades (net) produce 320 pips profit (net); so, each trade produces a profit of 32 pips.
Also, TP = SL in each case; so, your risk (SL) on each trade is 32 pips, as well. In each trade, position size is 32 mini-lots, so your dollar-risk per trade is: 32 pips x 32 mini-lots x $1 per pip per mini-lot = $1,024 risk per trade.
You limit your risk to 2% of your account balance, so [B]you need an account balance of $51,200, in this scenario[/B].
If you change the number of net winners per month (which changes the number of pips profit per winner), then the required account balance will change, as well. Assuming a constant number of pips per month, producing a constant net profit per month, the required account balance will be proportional to the number of pips profit per net winner.
Here are some other examples, which illustrate this proportionality:
[ul]
[li]Net winners per month: 40 — Pips profit per net winner: 8 pips — Account balance required: $12,800
[/li]
[li]Net winners per month: 20 — Pips profit per net winner: 16 pips — Account balance required: $25,600
[/li]
[li]Net winners per month: 10 — Pips profit per net winner: 32 pips — Account balance required: $51,200 (as above)
[/li]
[li]Net winners per month: 5 — Pips profit per net winner: 64 pips — Account balance required: $102,400
[/li]
[li]Net winners per month: 2 — Pips profit per net winner: 160 pips — Account balance required: $256,000
[/li]
[li]Net winners per month: 1 — Pips profit per net winner: 320 pips — Account balance required: $512,000
[/li][/ul]
Based on the examples above, I think you can use your own trading metrics to determine the account balance you need.
[B]Your question implies successful, consistent trading. Are you that good a trader?[/B]
Great answers in this thread.
“Your question implies successful, consistent trading. Are you that good a trader?”
No sir i simply am not. Just trying to get a feel for this business and whether its worth while getting into it for my family and my self in terms of finances? Thank you very much for all that help
step #1: honestly judging where you stand now checked
stpe #2: makign up a realistic expectation in progress?
step #3: working toward this targets pending for update
Do you have some examples for a constantly profit strategy?
10% monthly is a lot tough. But for 100k, there should be more in it, right?
Btw, happy new trading year
Id be very carful when you say that you are looking to use trading the Forex as a means of improving your income for your family. Its very rare that traders when starting off make profit, let alone break even. Of course you may have tarded before, but I would advise you paper trade your system before jumping in with real money. Taking advice from other co-traders is great in terms of knowledge; however nothing beats a system that you have generated 100%. If you can do this then you alone know 100% of your system such as all the advantages and disadvantages.
I would advise as a friend to start trading for your own benifit, and see how things work out. Bringing a family into your trading scheme can yield HUGE pressure when things dont go to plan.
Ive been working on a trading scheme for the past two years of my life, thats two years of paper trading untill i am 100% sure I am ready to invest. Ive back tested it by hand, not by automated trading software for the past three years. Call me old fashioned, (and perhaps awful at spelling) but only then will I know everything there is to know concerning my own trading approach. This is what I would advise to you, and anyone else to do. And just for the record I’m 22 and started building my system at 20!
Good luck and rational planning is key.
James
Do you have some examples for a constantly profit strategy?
10% monthly is a lot tough. But for 100k, there should be more in it, right?
There are a lot of systems you can choose. The most important things to keep in mind are
[ul]
[li]your own trader psychology
[/li][li]money management
[/li][li]the amount of time you will have to trade
[/li][li]what timefram (related to above)
[/li][li]what pairs to trade
[/li][li]mechanical or discretionary
[/li][li]manualmautomated, or semi-automated
[/li][/ul]
There are tons of systems all over the internet to choose from.
I personally am looking at nanning bob’s 1.0 trend trade system. This is an example of a semi-automated trade
Nb 1.0 trend trade system @ Forex Factory
I love Ken Lee’s http://forums.babypips.com/free-forex-trading-systems/29160-true-pa-trading-using-mas-s-r.html I still use his ideas in my discretionary trading which is what this is. Although it has rules it is largely based on price action.
I also trade expert advisers and am performing a live forward test right now http://forums.babypips.com/expert-advisors-automated-trading/37459-forex-growth-bot.html
At the end of the day you have to do what works best for you and what makes the most sense to you but no matter what path you choose remember to live to trade another day by excersizing good money management!
I am fairly certain now that this isnt a proper business. I mean to make $10000 a month in real everyday life is hard but not impposible. I am traning as a accountant and so in tens to fifteen years time i should make around $150000 with a intial start of $50,000 after i gradute from university, then a generaly steady rise over the years as i gain experience. Between this process i can open my accounting firm or go in business in general.
But in this business you need $500,000! to make $10,000 a month! and thats only what skilled traders make. This isn’t a business for me is guess. But before i go away and never look back at the forex business , i would like to ask successful trader whether i am missing something?
How much capital do i really need to start with to create wealth( build a large amount of capital through compounding) and earn a monthly living which is classified as “comfortable” ( ie not jet planes and aston martins) but just a comfortable living?
What are your personal experience’s in this matter traders?
Hi Timemastro,
By the sound of things you already have a set plan to be a trained accountant, and thats good. You have an objective, and you have direction to where you want to be.
However before I start please note the following!
[B]You will NOT earn $150,000 let alone $50,000 a year trading the forex [U]and[/U] working as a full time accountant. As the old saying goes, which i hope you take with great importance, ‘Trading should be treated as Job, not a hobbie’[/B]
It may sound harsh, but if you want to get really good at it then its one or the other. Any successful trader I hope will agree that the amount of work you need to put into trading to really become good takes time, and obviously time cant be split between two professions.
So, moving on to your issue. You assume in your poste that you need $500,000 to make a net profit of $10,000 per month. This is not actually correct for a few reasons. The first reasons that I guess any good tradrer would point out is the risk reward ratio, and how much your risking of your total account per trade. Im not going to go into that. Lets start with a motivating reason to get you back on track.
I know of a person, who started with £2000 (im obviously from the UK), and risked 7.5% of his account per trade. This may seem higher than what some people prefer to trade with. Within one year he turned this into £40,000. And if my memory serves me correctly, he placed a total of 230 to 250 trades in that year. He was obviously very good at what he did, call him a gambler with respect to his attitude to risk, but he had good reasons behind his trades. He used only technical analysis, and so traded graph signals.
I dont want to get into the complex details of what leverage he used, and such things along those lines. I just want to prove a very important point.
Start small and work your way up, dont get demotivated by small wins, these soon become much much bigger as time goes on. Perhaps open a micro account and trade small while at uni, then you have nothing to lose out on. Your becoming a trained accountant at the same time your learning and getting a feel for the forex market. And then if you like it, you can splash a little of your $50K into the forex game when you graduate.
One last thing, stay motivated even if things dont go your way first. Thats where people either forget about risk reward, and gamble far to much than they shoud, or just walk away not knowing what they did wrong.
If it was easy then everyone would do it.
Kind Regards,
James
James mate, i am from the UK as well man! i was talking in $ terms for people outside the UK. Lets hope we British make it here. :). Joking aside, thanks for your advise. I know what you mean when you say i cant be a accountant and a FX trader.
But that trader from Uk who turn £2000, and turned to £40,000 is amazing. With progress like that he could be making millions. Good for him. I guess that tells me that if your good enough in this business you can succeed. Right now i am not even close to being good enough. Just a noob. Thanks for the help!
Hi,
Its not about being how close you are to the game, its just a matter of keeping on the ball. I dont know you as a person and so I dont know yoour knowledge on this topic. But learn your basics first, we’ve all been in the same situation of knowing nothing.
And yes that guy was amazing, however he was also an idiot who took chances he couldnt always back up with margin. He was just an example to prove that it could be done.
I guess I would supprise you if i said that I’m a graduate accountant to, ive been working on the forex for two years now. Time well worth researching as now i have a much better understanding.
Good luck mate and stick at it.
Oh wow! That does surprise me. It would be so kind if you do one thing for me. Could you please give me a list of the books (expect for babypips) , video courses you went through to gain the knowledge you have right now, since you have been doing this for two years? Also which universtiy did you go to?
Hi,
Ok, well without being told off for advertising, I signed up with IG Index. When you do this they will send you a trading educational folder, along with other materials. A good starting place for anyone. However most if not all spread betting providers out there all offer some sort of free educational training. This could be in the form of a book, or internet based training via video guides. I do know that all you have to do with IG is open a real account, and you dont have to deposit a penny. Also this will then give you access to all the charts and graphs.
When you know your basics, download a free charting software to get a feel of the bigger picture. Meta Trader 4 is good as it can hold a hell of alot of history. This is good when you want to work on technical analysis.
In terms of books, there are loads. just search the phrase ‘Forex Charting’ in Amazon and you will see what I mean.
As soon as you get your hands on your first book you will know what you need to do further reading on.
I went Staffordshire Uni to do a 2 Year Fast-Track in Accounting and Finance
Timemaestro a couple things
First off I would suggest you need to redirect your approach. Unless you see 10k a month as a motivator than you should be focused on learning how to trade and worry about how much capital you will need for later.
You could start out with a micro account and trade pennies while you are learning and focus on your money management.
This is critical it is all tied together but look at percents and not money.
Learn how to trade. The best course I have found is by Chris Lori and if you are clever enough you could find it for free otherwise it is still well worth the money. If you focus on trading just an hour a day or like 5 hours a week you could be consistantly profitable within a year or two.
Once you have found a system or method that you are comfortable in that helps you to participate in the markets and is consitantly earning money then you can open a larger account and here is an idea. don’t htink owe I need 10k minmum maybe all you can muster up is 1k or whatever. Open your live account with that and instead of blowing money on crap that you don’t need set a little aside each week and deposit into your account this way you are earning a return and still growing your account.
Before you know it you will realize returns you never thought possible and btw 10% a month is really chump change. I know guys who do that weekly. I would get flamed for this but I even know some guys who do that in a day!
If you trade lets say three times a day and risk 2% a trade and win 2 out of three which is still very conservative you would be earning 40% a month. your going to be an accountant do the math and see why people love forex. It is possible and even if you run the numbers with 20% a month starting from 1k. I thnk you will be amazed how quickly you can compound that into 7 figures.
Don’t give up bro! I only wish I found forex when I was 20.
Good advice Johnny,
He’s hit the nail on the head timemastro. Just put in the work and the numbers will do the rest
Good luck mate
Firstly i would like to thank you for the time you put into this and the advise you gave.
Yeah what you said does make a lot of sense. It really does sound like a good deal. Here is my plan now… learn about the forex , trade demo or trade live with micro account , get a winning trading plan which suits me and keep putting money in slowly and watch it grow. But the main problem is balancing being a charted accountant vs being a currency trader. Its not easy. BUT THANKS MAN! YOU GAVE ME HOPE!
Hey,
One last thing to add before go away and make some money
Dont forget that the forex market is 24 hours a day 7 days a week with the exception to sunday morning/afternoon. I trade from 5am - 8am UK time, thats before any 9-5 normal job, including that of an accountants, and also before any of your uni lectures mate.
A vast number of movments occur on the GBP/USD between these times, so dont be put off going out of your way to fit these two things into your dailey schedual.
Also you get weekends off…thats weekends off from uni and Forex trading. Plenty of time to catch up on uni work. Thats what ive been doing anyway.
Good luck mate,
Kind Regards,
James