I have been reading in the forums that a normal profit return for a professional/experienced Forex trader is about 15% per year.
Trading intraday randomly, for example, always going long in a pair, risking 1% (stop loss) and target for 1% (profit), you will “win” 50% of the trades (simple probability). That means you will end the year with 0% profit.
After studying in the school of Pipsology, reading books, and learning about fundamental, technical and sentiment analysis, and applying all of that, I can imagine it’s not unusual to increase the percentage of winning trades to, let’s say, 66%. That means 2 winning trades out of 3. If you open 3 positions per day, you will have a net profit of 1% each day. And that is, for example, 200% return in a year if you trade 200 days.
Am I right? Am I missing something in my calculations? Is 66% of winning trades too much? If that’s the case, what’s the point of studying and learning if you can’t noticeably increase your winning probability?
Isn’t it bizarre, the figures that people come up with for these very poorly-defined and vague questions, always advanced with absolutely no evidence at all?! It readily gets to a point where it becomes self-perpetuating, simply because it’s the “consensus of opinion”, and that makes others believe it, quote it, refer to it, and offer it up to people as “guidance” and “advice”, however nonsensical it might have been in the first place. Be careful what you choose to believe.
This is completely wrong: you’ll end the year with substantial losses arising from your dealing costs.
Yes - most of the stuff explained in the school, I think.
The percentages of winning and losing trades [I][U]in itself[/U][/I] isn’t a helpful avenue of approach. What matters is that you win more, collectively, from your winning trades than you lose from your losing ones. Yes, it’s true that theoretically, technically, if you trade a constant position-size with a single-entry and a single-exit and the same distances between the entry and unmoving stop loss as the distance between the entry and the fixed take-profit-level, you’ll need to win more than 50% of the trades (typically quite a bit more) to make any profits, but this would be a rather bizarre and contrived way to trade. What you need is a few months’ tractice on a demo account. (We all did, when we started.) This will at least give you enough background understanding and experience to be able to formulate better and more appropriate questions.
Expect to lose money in year 1.
Hope to move to break even or small profit year 2.
Hope for consistent profits year 3.
The harder you try to hit difficult targets, the more likely you will take unnecessary risks and blow your account.
Take it easy, slowly slowly catchy monkey
200 trades and no losses. If only it were that easy. Shooting for those lofty goals will blow your account. set modest goals and u add from there.
Its good to have faith in yourself but not hubris.
It is bizarre, LExy, and, also, a little bit…lazy… There are enough threads dedicated to this topic… none of them agree, so why keep asking the same question? There is no fixed answer… it depends on your trading potential, capital, asset class, instrument, business model (if a business at all), etc.
This is completely wrong: you’ll end the year with substantial losses arising from your dealing costs.
SO true!!
The percentages of winning and losing trades [I][U]in itself[/U][/I] isn’t a helpful avenue of approach. What matters is that you win more, collectively, from your winning trades than you lose from your losing ones.
Don’t tempt fate
In the 6 weeks up to last week I quintrupled my account, without taking any daft risks. I had a run of well over 20 winners.
In the last week I’ve lost 35% of it. Still well up on 7 weeks ago. Its been like everything ive touched has turned to sh#t, I should have posted my trades with advice to contra-trade me.
No change in system, no mm changes, no silly risks, just one of those losing streaks we all hit from time to time.
Seem to be out of it today, pulled back a few small winners
Onwards and upwards
I am inclined to recommend average of 1% return per day.
End of the month, withdraw all profits and repeat the process.
Your capital is “the hen that lays the golden egg”.
Anticipating the return is nice to muse over once in a while
cause it gives you hope and motivation.
15% is still difficult not impossible but for this you still have to risk more. If you are aiming for a 1 : 2 return from your trades then you have to risk 8% per trade, which is quite high. If 3 to 4 trades goes in loss, your account will be down near to half.
Thank you all for your answers (specially to those who seem to have been born with all the Forex knowledge inside their brains; it’s always a pleasure receiving answers from geniuses). However, I think most of you have misunderstood what I was asking (maybe it’s because English is not my first language and I didn’t explain it well).
I will explain my doubts again with an example (for those who still want to help me understand this). I always thought that asking “silly” questions help to learn (and that’s my ultimate aim), so I will try again.
Imagine an invented pair XXX/YYY, which price is 1.0000.
I have 10,000 XXX in my account, and my leverage is 1:200.
I want to risk 1% per trade (100 XXX), and aim for a 1% profit (100 XXX) (ratio 1:1).
I buy 1 lot at 1.0000.
I set my stop-loss at 0.9990 and my take-profit at 1.0010.
Eventually, the price will reach the stop-loss (100 XXX loss) or the take-profit level (100 XXX win).
If I always buy 1 lot with this conditions, there is 50% probability to reach the take-profit level in the long term, so I will end the year with 0 profit (spreads are not taken into account, but I know it affects slightly the probability; swap is also not taken into account, as these are intraday positions).
Now, after studying, learning, and applying every kind of analysis into my trades, I expect to guess correctly the direction of the price in 66% of the trades (I don’t know if this is too ambitious, but there should be some difference between trading randomly or with knowledge. If not, I don’t see the point in studying).
Now, I open 3 positions during the day. I hope to guess correctly 2 of them, and to fail the other one. So I end the day with 1 net winning trade, 1% profit (in this case, 100 XXX).
I repeat this 200 days in a year. That’s 200% profit.
(If we want to be accurate, and to take spreads into account, let’s say I guess correctly 70% of the trades to compensate the spreads)
My question is not if I should expect 200% return in a year. I’m also not saying that I will never lose a trade. I’m just asking if this is theoretically possible, or if I’m missing something in those calculations. And I’m also asking if 70% of winning trades is normal or too much. That’s all.
