Retail traders become forex billionaire

Beginner Questions
1

It always been a question to me why there no forex billionaire out there (not to my knowledge, exclude Soros).

When I first learn about forex, I was told that a consistent profit for average 10-20% per month is a realistic/achievable goal for a retail trader. By this logic, it should be plenty amount of forex billionaire out there.

Lets do the math:

  1. Assume one consistently profitable trader starts trading with a $10,000 account (which is very small amount for a serious trader).
  2. He is able to compound his capital for 15% per month on average.

No. of year Equity($)
1 53,502
2 286k
3 1.5m
4 8.19m
5 43.8m
6 234.5m
7 1.25b

I know some retail traders are able to reach millions or perhaps tens of millions, but none of them make it to the Forbes list. Some people say that this is because successful traders always diversify after they have reached certain degree of success, and thus there are some billionaires successful in forex but not solely based their success on forex.

I find this kind of reasoning unconvincing, if forex become your most effective tool of building your fortune, will you change it for some others vehicles/ business as your primary source of income? Even if you did diversify, forex will most likely stay as your main income source, and it should not prevent you to further compounding your account. Not to mention other investment like stock market at best produce a 20-30% consistent income per annum only.

My guess is there is a cap in retail forex trading (ie the numbers of lot). When your account grew big enough you are sort of incapable of using the same leverage or same position sizing to fit your percentage return ( i.e. trading at one pip worth $1000), and thus you’ll be force to trade at a much smaller size and result in smaller percentage return, and by time the percentage return will become smaller and smaller.

My friend provide a solution to the above, his answer “why don’t you trade multiple account when one is capped?” , and no people did it? and thus my guess is probably incorrect either.

It is the desire to build great fortune make us looking into forex trading business, I don’t believe all successful forex traders are totally satisfied by having a couple of millions. Maybe there are some but definitely not all.

Does any of you guys know the reason, why there’re no retail forex trader become billionaire?

2

I agree with you whole-heartedly and I hope someone could answer the question.

Soros used an investment fund, so he has probably never made 1000 times his capital and so he is not an average-Joe-to-riches story of making money through forex.

Even if there is a cap on the amount of lots with one broker, traders can still use different brokers and at the millionaire stage, successful traders should be able to afford a house address across different countries that should maximise the number of reputable forex brokers they are eligible to trade with.

Something definitely does not add up here, but, for us, we can only keep accumulating profit until we reach that stage.

3

Even if a broker did cap the maximum quantity of lots available to be traded you have to remember that the broker is the middle agent in the forex transaction.

If the lots are not available at market execution then the trade will not take place at the named spot price, regardless of the number of simultaneous accounts that you have open. This at the end of the day is what causes price to move.

4

Most Investors would tell you, there are 2 things at work. 1. You and 2 your Money. You go from building capital to: protecting capital while building. Whether you have a hundred or a billion, the strategy is the same. Risk only what you’re prepared to lose. Build and Protect to Protect and build

5

Sure, no trader will succeed without a good risk management.

Anyone out there have a clue on the question above? Why there isn’t retail trader really make it big and become a self made billionaire?

6

Hey Jezzode, I remember you were doing some kind of public retail trading demonstration from $2500 to $100,000. How is that going? I haven’t seen any updates about it.

The answer to the OP’s question is pretty simple actually. Liquidity in the forex market is finite at any given price at any given time.

When liquidity is scarce, meaning there is more demand for liquidity than is available, slippage & leakage are the result. Your order will be filled up or down the price ladder, and you won’t get the amount that you want, for the price that you want. This will have the effect of making your entry more and more unfavourable to your goal of profit.

Furthermore, when you go to close the position, you face the same problem of scarce liquidity. This will also cut into your bottom line. Making your losing trades more costly, and your winning trades less profitable. This will put the brakes on any kind of aggressive compounding scheme, and force you to cut your position size in order to keep your trading strategy profitable.

That is what is physically stopping you from compounding your account into billionaire status, but there are emotional and psychological factors at work too. With larger account sizes comes increased risk of loss in nominal dollar terms. Like gp00053 said, the natural tendency is for you to start focusing on protection over growth. Basically the Fear of losing what you have overrides your Greed for more money.

8

The gold rush of the retail traders

reminds me of something much older:

Klondike Gold Rush - Wikipedia, the free encyclopedia

9

Well that’s not the way market works …It is easy to make 10-20% per month but most difficult and almost impossible is to make it on regular basis. So if you make 15% for 3 months then 4th month you lose 35% so that leaves u at 10% in 4 Months. No trader can make nonstop profitable 84 months like you have given estimate. Fx trading means up and down, up and downs and on average if you are more up than down then you are profitable. So when you make an estimate you shall count both profit and loss. Whatever is balance that’s the Net Profit.

10

Yeah, perhaps that’s the real answer, the win rate is not sustainable, it maybe true even for a monthly 10%, because with that, the top investor in the world should not be Warren Buffet

11

Trying to be consistent in gain of forex trading is really difficult. Our losess more huge than our profit.
Its our homeworks that must be resolve. But, in regularly I can withdraw some dollar from Liteforex broker. it was about $200 per month. I always using EA there…