Profitable Enough vs My Local Bank?

Beginner Questions
1

Hi Everyone
Currently, I’m reading about Forex for 2 month and I really like to enter this market.
I know, it’s not a Get-Rich-Quick scheme and needs much time for finding a consist way to make “less loss” and many many more things, leverage, capital, margin, etc.
But before I start to learn and spend [B]at least [/B]2 years on this market, I have a question that only you guys know the right answer.

I read on many forums that the average profit is a number between 10-30% per annum of return.
I see some results of Hedge Funds in 2015 with funds between $250 mil and $1B in assets. [B]Their Average was 26% return per annum.[/B]
Hedge funds are known for aggressive portfolios and high results. Surely people who run those funds are probably the most intelligent human beings on this planet. They came from families who could afford to send them to best schools. They are ambitious, hardworking executives with an excellent understanding of economics and finance. They often have influential friends in many sectors they invest in.
So in best result [ plus bunch of luck ] Some of us [B]Might [/B]catch 17% or above.
Currently I’m in Iran and Some banks have 25% interest rate on deposit! [ex. if you have 100k bucks, they will give you 100[B]+25k[/B] in a year)
[B]So, Can somebody justify me? Am I wrong or our local banks giving more profit than this market without even worry about charts, bars, news, numbers, being awake some nights etc…??![/B]

PS: I couldnt copy hedge fund profit proof since this is my first post, you can find it in moneycontrol dot com [ in mutual funds section]

2

Don’t worry about that - everyone will take your word for it that you’ve read something online justifying what you’ve said about that, and its [U]detail[/U] isn’t actually crucial to what you’re really asking about, anyway.

The analogy (between individual retail traders and collective institutional profits) has its limits.

Retail traders (especially of forex) have leverage available that institutions don’t have.

And averages are also funny things, statistically, because of skew. There are plenty of hedge funds and investment managers [I]losing[/I] money, and also small numbers of them earning “the Earth”: what that “averages out to” isn’t terribly relevant or meaningful, really, in this context.

That certainly surprised me! How safe are they?

You’re probably not wrong, I guess, if they’re completely safe (might that be a big “if”?).

There are certainly retail traders who go through something like a 3-year learning-curve with a few hundred hours of well-selected education and a few thousand hours of practice and gradually emerge from that process with the ability to make around 6% per month profit on “average” (and when you compound that monthly, it’s about 100% per year), and this is probably more like the “dream”/“target” of people embarking on the process of “learning trading”.

However (and it’s a very big “however”!), the proportion of aspiring forex traders who ever actually become steadily profitable [B]at all[/B] is on the low side, to put it mildly.

In my opinion, most of the people who “get there” are intelligent, numerate, educable people with the right sort of attitude (whatever that means) and a talent for reliability, persistence and self-employment (I think those [B]are[/B] talents - not everyone agrees, perhaps), and they have or quickly develop some judgment on the [I][U]key[/U][/I] question of “who to listen to” (because in trading, misinformation is [I][U]everywhere[/U][/I]!), and they’re people who - if they hadn’t taken up trading - would have been pretty likely to have become successful at whatever else, instead.

I don’t think it really matters whether the banks are paying 5% or 25% interest on deposits: what matters is whether [I][U]you’re[/U][/I] going to be one of the people who become a successful trader. And we can’t control that outcome by giving you advice, can we? Key concept, here: if you look at a [B][U]median[/U][/B] average, even 5% (per year, not per month!) is more than “average trading income”, anyway.

Not sure whether what I’ve said here will help you at all, or whether I’m “just rambling”? (I do that, sometimes. :8: )

Edited to add: welcome to the forum (as a “posting member”, anyway, even if you joined in 2014!). :cool:

3

That certainly surprised me! How safe are they?

Yes They are absolutely safe. They are our major banks not FCI or anything else. millions of peoples have deposits in these banks, even my Dad, and they are receiving their profit every month.

and by your answer I found that our banks are giving more % compared to even hard-liners of Forex market without any risk, ANY. Thanks a lot for Your Answer!:57::35:

4

And an afterthought … another potential advantage of trading profitably, over high-interest bank deposits, is that interest-rates can change dramatically with economic circumstances: in other words, they may be temporary, whereas profitable trading abilities, once developed, are more of “a skill for life”. Just a thought …

5

Ooh, i had to join just to answer this question - studying banking and finance currently and now looking to learn trading proper. The answer to you question on why people, banks and funds trade?

Because a bank will never pay you more interest than the market.

Put it this way - your local bank in your local currency may pay a 25% interest on your funds. But that’s likely because the real rate of interest is likely above that. And this is likely driven by a currency facing high inflation (which yours likely is). That means, against other currency, earning 25% is the minimum to ensure that the value of your $1(in local currency) today is as close to equal to a $1(in your local currency) tomorrow.

If you put your money in the bank - you likely will have the same value of currency in one year - that is, even if you have 25% more, you will still only be able to buy the same amount of goods you can today. That is why investors chase for returns beyond this rate - so their ‘real’ value of their currency goes up.

6

I follow the principle of the logic, of course, but inflation in Iran is running at [B]around 9% [I]per annum[/I][/B] at the moment, so 25% interest on bank deposits does sound pretty good - at least for now - if they’re safe …

8

No, inflation is not showing the whole things. we have a SUPER Ailing economy. since the extreme sanction on Iran, we are facing an emergency situation for 5 years and got worse when oil price lowered to 25$ per barrel.
the interest rate was 15% on 1st of December 15 [and IRR was: 32000R vs 1$] , but because most of companies checkout with their foreign partners outside the country in December + Religious Travels occurs in this month, IRR got weaker position against dollar [ 40000R vs 1$ just in 1.5 week, that’s a disaster!! ] then central bank ordered to raise interest rate to hold the currency chaos.

12

do some research on strategies read some books briefly and open live account with good broker bro dont bet big unless you know the market you trade on

13

Man hanooz varede Market nashodam chon hanooz vasam mobhame. Can I ask You some question mate?

14

This 25 % interest surprised me as well. But if these banks are really safe I guess you can depend on them but have in mind that this could be only a temporary situation. Unfortunately the world environment is changing pretty fast and we can’t predict how and where it will impact the economy. If you are interested in trading you can invest your time and eventually learn to make a living of it as a guarantee that if something happens with your local banks, at least you would not lose all.