Account growth goals

Beginner Questions
1

Hi Traders

As part of my trading plan I’d like to include some kind of account growth goal.
My question is, “what is an acceptable monthly growth goal to aim for in terms of percentage?”

So If I have a $200 mini account and I aim for 10% growth per month, is that a pipe dream or is it reasonable?
In year 1 $200 will become $628; year 2 it will become $1970 etc… you get the picture.

The rules will be simple. Hit the % for the month and stop trading. All other risk management and capital protection will apply. Some months may be loss months but overall I do think you need a goal of some sort, just like targets for a business.

Your comments/advice would be greatly appreciated.

Trad

2

Hi Trad,

Yes, it’s definitely achievable. 10% per month is a lofty goal, however there are a number of traders that I know doing just that.

There is a youtube channel that I’ve been following where the guy is also trying to achieve this. He’s not manually trading, it’s all automated, but it’s still interesting to watch.

3

Theoretically its sound. Practically it needs extreme discipline, zero greed and a tonne of patience.
20 bucks for a months work isn’t worth the effort, is it?
Get something else to keep you busy and don’t expect any returns from your trading for a very long time.

If you get past these kind of thoughts and stick to your plan, you will end up a successful trader with the right trading psych.

4

Thanks for the reply. I’ll be sure to take a look!

5

Thanks Grix.

What you’re saying about greed is very true. I’ve made my 10% for this month already and still 3 weeks to go…
Feels like i’ll be missing out somehow. I could just lose my gains too so I’ll demo the rest I think just to keep up my vigilance and flow.
T

6

Everything is achievable, but a 10% monthly growth rate every single month is something that I do not think is sustainable. On paper everything looks good, but when you start trading you will soon understand it does not work quite like that. Think about it it from this perspective: Most great professional forex fund managers may get between 25% and 40% per year. I think it is a bit pathetic, but if you can achieve 30% per year consistently you are doing better than 99%. Just my point of view on it, not meant to discourage you from your 10% monthly target.

7

Thanks for the reply LB, I’ll see how things go and keep a monthly update running here whether I succeed or not.
I’ve decided to focus on the process more than the result(as Mark Douglass suggests) but I do believe you need some kind of a benchmark too.

8

Hello Tradman,

like my predecessors on this thread, I would agree that 10% is a tad ambitious on a monthly/regular basis…

There is nothing more annoying than people giving advice… but… here comes (I did warn you it was coming)…

What about diversifying your investments?

There maybe high-interest accounts (e.g. Best Cash ISAs 2014/15: 2.75% AER loophole - Money Saving Expert) giving you

a fixed annual return of 3%, tax-free, which in two years would be 6% - not a bad figure, by current rates…

Meanwhile, you could aim for a much lower target for your Forex investment, knowing that a fixed interest was coming

your way regardless (and without any effort)…

Personally, if I had enough cash, I would trade stocks… Forex is the product of choice for those needing leveraging

to ‘get in the game’ early… Perhaps if the size of your account is, as you say, $200, you will also have to use Forex

for now, but by trading defensively you will have to use, as GRIXfx said, ‘a tonne of patience’…

What sort of investment instruments are available to you in South Africa? The USD/ZAR had some fantastic moves recently

and I am sure that anyone trading it may have had some great opportunities from it…

One other thing to check is whether your Forex account gains will be taxable in South Africa, or whether you would

be better off going for spread betting, for example…

Cheers

9

$200 w/ 10% a month? Why such a low starter amount? Why not demo trade, ensure success on a regular basis and deposit 5 - 10k? Or show demo results to family and friends and have them give some money…then pay them back + some extra once you are making profits…

10

It’s not really fair to compare fund managers to retail traders. They’re handling amounts of money that are large enough to the point where they have to worry about fills and moving the market. Your equity growth becomes linear rather than exponential at that point. Also, you have to consider that minimal drawdown (capital preservation) takes precedence over maximum capital growth. If a fund manager has a red quarter, he’s going to lose a decent percent of his clients.

I do agree with you about the sustainability. The truth is, the Internet is littered with e-stats. All the posts you see (mainly on other forums, but occasionally here on BP) about traders claiming to make double digit or higher returns every month are usually just dreamers, salesmen, or gamblers who blow up a few weeks later. Of course it’s possible, but we’re talking like the 1 in 10,000 here.

11

If it were me I would plan my money management in 2 steps. This is after I have a trading method based on the type of trader I am. Step 1 build the bankroll while protecting existing capital. Step 2 would be protect the bankroll while building the bankroll. I’m a big believer in setting goals and in addition to monthly, annual and 5 year goals, I also set a goal for each trade. I have found the more detailed your trade method, money management and mindset rules are the easier it is to meet your goals.

My trading rules allow me to enter a trade at 3 different times, exit at 3 different times and use 3 stop loss points based on a % of my account balance. If everything goes according to to plan, If I enter at the first point of my trading rules then exit at the first exit point, I’m risking just over 3 to one. Id If I wait and enter on the next level then exit at first exit point my risk is just over 4 to 1 and if I wait further and enter at my last entry point then exit at the first risk is 6 to 1. Of course the longer I wait the less trades I execute. If I were building my bankroll I would be entering more at the 1st level than if I were protecting my bankroll I would enter at the 2nd or 3rd level.

So again in my opinion set a whatever goal and see if your level of experience allows you to meet that goal when things go right as well as when things go wrong. Good Luck.

Gp

12

Hi PMH

Thanks for the interest and your reply. I have no experience in stocks and it does seem a lot more research is involved into individual companies etc.
I have traded the USDZAR a few times but it can be expensive. Your stops are a lot larger in terms of pip count and the spreads a lot higher too.
As I mentioned earlier I’ve hit my target for the month already and moved over to demo for the rest of the month.

I neglected to mention that each month I’ll be depositing $100 odd into my account as a monthly investment so that will grow. When I’m able to I’ll deposit more.
I believe the psychology behind it is important as most people see FX trading as a past time and hence treat as such.

If I’m serious about what I’m doing, which I am, then I’ll invest in myself. Not just once off, but regularly. This I believe will promote risk management and help curb greed. I have my day job and will continue to do so for some time still, at least the next 5 years.

Forex tax is still a grey area in SA as to how it should be taxed. I’ll cross that bridge when I start to draw an income!

T

13

I like the idea Clam, I’ll show some growth and see what buy in I get!

t

14

[QUOTE=“Tradman;620723”]Hi PMH Thanks for the interest and your reply. I have no experience in stocks and it does seem a lot more research is involved into individual companies etc. I have traded the USDZAR a few times but it can be expensive. Your stops are a lot larger in terms of pip count and the spreads a lot higher too. As I mentioned earlier I’ve hit my target for the month already and moved over to demo for the rest of the month. I neglected to mention that each month I’ll be depositing $100 odd into my account as a monthly investment so that will grow. When I’m able to I’ll deposit more. I believe the psychology behind it is important as most people see FX trading as a past time and hence treat as such. If I’m serious about what I’m doing, which I am, then I’ll invest in myself. Not just once off, but regularly. This I believe will promote risk management and help curb greed. I have my day job and will continue to do so for some time still, at least the next 5 years. Forex tax is still a grey area in SA as to how it should be taxed. I’ll cross that bridge when I start to draw an income! T[/QUOTE]

I use to trade eur Zar as well as usdzar but it’s super risky spread is really big at time s

15

Hi GP

Thank you for the reply. Pardon my ignorance but what is the Bank roll? Capital I get. Would you mind showing an example of the 3 different entry and exit points in a pic/set up?

T

16

Sorry, Bankroll same as Capital (poker slang)

audusd.um5.jpg700×320 16.4 KB

17

Lol ok thanks. So would I be right in saying all 3 entries share the same stop level?

18

Never set a goal of your trading, if you do you are limiting your self subconsciously how much you can make, and when you reach that level, then mysteriously you will have a hard time reaching over that barrier, yes it will become a mental subconsciouss barrier for you. the truth is, there is no limit how much you can make, the same thing using TP levels, I am against that idea, because that is also limiting your self, thereore Im using the trailing concept and take what the market offer me. but you should definitely limit your self how much you can lose :slight_smile:

19

1st entry. . . Stop level 2nd Entry, 2nd and third entry uses 70 Stop loss, Depending on the pair what’s happening after I execute the trade, I may switch to trailing stops, and use pending buy orders at the stop loss in certain cases, but most of the time I do a lot of analysis before entering the trade to make sure those entries, stop losses and take profit are high probability.

20

Depends on your edge and how often you’re trading (plus your position size). 10% per month is within the realm of possibility.