So, I have dreamt of big profits, like I think everyone starting to trade forex and read threads about how much people expect to make and are making per month. And im bit confused… I have traded now for about 2 months with an practice account making winnings of 10% per month. I use mainly 5 minutes charts and spend 2-4 hours a day following the charts and making trades when I see a good opportunity, averaging 4-5 positions per day. So naturally I started to calculate how I would be soon making thousands of dollars. Then after reading few threads about the subject Im not so sure anymore. There seams to be consensus that making even 1-2% per month would be really great, but concidering the time I use in Forex, I would need quite massive starting fund for it to be anywhere worth my time… Have I just been lucky for these two months? Or are there people who are actually making something near the 10% per month, beside maby the 0.01% of profoundly gifted ones which I dont really see myself. Or does making higher profits just get harder when your bankroll gets bigger because of liquidity issues etc?
Hi Timppa,
Firstly lets hit the issue with how much is a realistic return per month. The problem with trading forums, and this is not only limited to babypips is that when the majority crowed agree on an answer it’s assumed to be correct, however this is not always right. Is 10% a month good, or is 2% a month more realistic?
Well, from a retail account 10% a month is a realistic target, and totally achievable - perhaps not every month, but an average 10% is sound and acceptable. Again, sticking with the retail account, the people who suggest 2% a month is good are more than likely, if not certainly, confusing the returns of retail accounts with that of commercial investment funds. So why can retail traders expect to make more as a % of the account balance; well to put it simply we are trading with account balances which are a fraction of the size of large commercial accounts which run at multiple millions or even billions of dollars. Try and make 10% of perhaps $10,000 in a month (very doable), now try and make 10% of $1,000,000,000 (not so easy due to liquidity and other commercial issues), this is why commercial accounts lower their expectations to perhaps a few percent profit per month, not to mention they are trading clients money so want to reduce risk!
Trying to compare retail account returns against commercial account returns is like comparing apples to oranges - it doesn’t work.
You will of course always get people who suggest that retail trading is easy (lets forget commercial accounts from now on) and who think making upwards of 25% or more each month is realistic, well, it’s not. This is not my opinion, it’s fact, and has never been done. I’ve seen many live real accounts, and spent some time looking at these verfied accounts, and I have never seen any FX trader manage to make an average and CONSISTENT gain of more than 10-15% per month. So the next time a fellow trader suggests 10% is to low, and you should be aiming higher, remember this expression…
…“What can be asserted without evidence can also be dismissed without evidence”
Best of luck
Well explained Jezzode.
Its not that easy as newbies think about Forex and after doing demo.
Good luck for Timppa…
So, decided to update this after using real money for one month, and everything has gone well. Couldn’t quite make the 10% that I did with practice account, but did make still little over 8%. Will keep updating. Oh, and thanks to Jezzode for very clear and good answer. Motivated me to go on.
100% agree. Great explanation jezzode.
Transitioning from the demo to live is always a bit hard and all newbies in reality have a hard time in coming to terms with any DD, for real. But the 10% is not that impossible a target…good luck and getting 8% is a great start…
I concur 100% on how much profit is realistically possible from Forex and the great explanation Jezzode provided. The distinction between retail and commercial accounts was excellent. I think there is one further consideration as far as “income” is concerned. How much of the profit to take out of your account as payment for your success. That is what I consider income and I will limit it to 15% of the profit I achieve a month leaving 85% to accumulate as capital which means my target income is farther out than it would be otherwise, so it’ll buy me a latte at Starbucks for now - LOL! At some point I hope to need to adjust the ratios, but that is pretty far off and I still need a reward in the meantime to keep me motivated and have it stay real.
Congratulations on a great start Timppa!
One thing worth mentioning is the impact of taxes.
Whenever people talk about investments they talk in percentages and everything is going to grow exponentially (at least, when people talk about it). If someone makes 10% per month - starting with 10k they’d have nearly 3 million in five years! With taxes, it’d be more like [B]1.5 million[/B].
I’m not directing this at anyone in particular, but in my general experience with people - if someone says, ‘Oh, yeah, I average about 10% per month’ what that usually means is that their good months are around 10% and they occasionally have a bad month.
If you earned exactly 10% per month 10 months per year, but had one ‘bad’ month were you lost 5% and one month where you broke even - instead of having 1.5 million - you might only have 400k (the exact amount would depend on which months were the good ones).
So, on paper you think '10% per month…I’ll have 3 million in five years’
In practice, even ‘about 10% per month’ and dealing with the tax man means you end up with a 400k profit over five years.
Honestly, that’s still an amazing amount of return and I remain skeptical at how many people seem to trivially make that 10% per month and more 
But, at the very least, it I think this shows how easy it is to skew the numbers.
I think you MUST make a difference between money and pips first!
when you can make 100 pips a month you can have a income WHEN you could start with $100.000 and lotsize=3
when you can make 200 pips a month is would already mean a decent income
the problem is not only getting a predictable stream of these pips (that’s hard enough by itself but with hard work, 2 years practice this should be possible) but the bigger (at least for most of us) is getting the $100.000 to really trade with. this may NOT be scared money, it should be money you can lose without selling your house or getting a lone, 3 jobs and so on…
and here is the dilemma, how to get this $100.000 if it can’t be FOREX???
DD is a big issue, there is one thing for sure, it WILL happen to you too. problem is if it happens in your first year when you are trying to hard to let your $1000 account grow you can start over again (to hard often means to big lot size for the account) . The need for too big lot size is much, much less when you could start with $100.000 because 2 lots would still give $2000 with 100 pips.
trying to hard, wanting to make money to hard, I must make an income, all factors why people are taking bigger risks than the account can handle.
And yes, with leverage 1:400 you can make money very very fast by using lot size =10 even with $1000 IF (!!!) the rate is ONLY going up from entry price. 1 pip down and you have a margin call.
and I can assure you that putting this $1000 on black in the casino will give you MUCH more chance to survive 2 rounds than 2 trades how won’t even go 1 pip below the entry price (and for the sake of this example I forget spread)
money makes money , without money the greatest trader will have a hard time!
My expectations currently stand at a return of over 50% on average per year. So far I am very far from it and knee deep in the water.
My is to have a min 3% in first year, 10% is optimum, over 10 will blow my mind
yes One should expect realistically in forex . People with high expectations try to do risky trading and are fail soon in their attempts. Forex is not a money making machine go with it in smooth way of getting profits so that you will remain safe with your investment.
Thought about writing a quick update on how my first year of trading has gone. Well, almost a year, still bit to go… Everything started really great, as from my previous update one can see, but after few good months I hit a bit of an rough spot and developed few bad habbits that cost me some money, even went to negative on few of the summer months. Managed to get back on track tho and rest of the year has gone fine. Currently my ROI% hovers around 60%, not as good as I had hoped, but to be honest, Im happy with it. Have learned a lot and hoping next year will be even better for me.
Good for you. Best Wishes and Continued Success
Gp
Q
Hi
I think the only one who can answer you question about being lucky is you?
I am trying to make profit myself for almost 2 years now and at last I am at the point that I don’t lose much anymore.
Personally I don’t believe traders who claim 10% a month on a live trading account with, for them, a big part of their savings year after year. Those traders should sell their house, go to a bank for the biggest loan they can get and put it on the FOREX. They will be biljoinairs within a few years…
being a Hero in demo is very easy, being a hero in live trading extremly difficult.
Please remember: There is nothing like free lunch!
I think if you can earn between 15 to 20% per annum its good bet to trade in forex,and above that its better but atleast this much should be earned.