Is 5-10% annual return swing-trading one currency without leverage BAD?

This may seem like a total noob question, but given I see EAs and what-not offering X*100 percent profit per year, I am a bit at a loss.
I recently started looking at Forex to expand my Futures and stock investments where such numbers do not really exist.

My own method for swing trades generates 5-10 percent annually per currency for the last 8 years when backtesting swing-trading based on daily charts.

This means:

  • No leverage
  • I only look at the percent increase/decrease as real numbers per trades and sum this up.
  • This is per currency.

Is 5-10 percent bad? Of course I will use leverage, but that depends on the portfolio size, allocation of funds, risk management etc.

Just curious…Am I missing something here? Everyone keeps talking about 10 percent per month…

No its not bad, but it depends on your benchmark.

Considering that the average trader loses money. if you can make a buck and keep a buck you are doing better than average.

However, 5-10% a month would be better and its doable with a low risk, low frequency approach like swing trading is.

My only concern with 5-10% annually would be whether it is worth it. Because this is barely (if at all) outperforming the major indexes.

Using these as a benchmark wouldn’t make swing trading for 5-10% annually that attractive. A long term buy and hold strategy has historically returned an average of about 7-10% annually. Without using any leverage. Just buy, hold and sit tight for the long haul.

Are you really doing any better than that? That is something you might want to consider.

Good luck.

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Thanks for taking your time answering.
I’m still trying to get my head around Forex as the stock-market moves similarly no matter if you trade DJIA or FTSE…
I have seen 5-10 percent in my back-tests for trading one currency only without leverage. This means roughly 30% of the time in the market. It leaves room for other currencies as well, so the accumulated profit should go up as well since I would trade several other currencies. However, 10 percent per month sounds insanely high… that’s more than doubling the money per year. Whats your secret :slight_smile:

I personally set a target of 20% annual growth, I can see 10% a month as a target, but surely some months are better than others and then some can be a real downer, it’s about compounding surely.

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Sorry i’m struggling a bit to understand what you are proposing here.

You say

Now as I understand it 1 unit of “Forex” is approx equal to $100,000 - but it is nebulous - so let’s look at the DoW (DJIA)

Say that stands at 25,000. So to buy 1 unit of DJIA - would cost you $25,000 and I’m wondering whether that is really “trading” - or whether it is “Investing” - and do you really want to tie up $25,000 on each bet ?

Then you say ;

So I’m not sure what exactly you are trying to say ?

Personally - I decide where I want to put my stop and how much money I want to lose - if it goes bad on me .

Divide the money by the number of pips and that gives you the price per pip I need to bet.

“Leverage” never even comes into the thought process - unless you have to “Choose a leverage” somewhere on the brokers software - but even if it does - it doesn’t affect my thought process on deciding “How much to bet per pip” !

Now if you’re saying you can make 2500 pips per year on the DJIA - are you ? That’s not at all bad ! - But to do that with your $25000 bet - how much drawdown can you put up with - without baling out - IF for example we get a dose of “Bat Flu” ?

In conclusion - I don’t think we can help much without you give us a lot more detail - but I’m willing to listen ! :sunglasses:

[EDIT - It has just crossed my mind that you are “Backtesting” to get these results - How exactly are you accounting for spreads and commissions etc - in your calculations ? ]

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Depends on the DD u had, leverage is not important…for example if u had -50% for +5% its bad, if u had -1% good…u got my point :wink:

It only takes one trade per week risking 2%, with a reward of 4% (1:2) to make 16% per month.

This is hypothetical because it doesn’t take losses in to account but there is usually 1 great set up per week and 1 to 2 extra decent ones that you can take. That is 1 to 3 good trades per week.

If you risk 1% and trade 3 times per week and aim for 1% reward on each trade that is 3% per week. or 12% per month.

Last week, I made 7% on one of my (higher risk) accounts from one trade. I only made that one trade for the week. I risked 5% instead of trying to trading every day of the week risking one percent.

10% per month Is doable but not easy by any stretch of the imagination. Some months, the market will not give it and other months, you will incur losses.

You can get 12% per year from peer-to-peer lending in Europe, with a set and forget approach.

if 10% per year is your goal, there are other investments or strategies that are less labor or mentally intensive than trading is.

But if you can end the year in profit, you are doing much better than most.

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I guess what I’m trying to ask is:

  • If I trade one currency with X number of contracts per year using zero leverage, what profit in percent is reasonable outcome per currency when swing-trading on daily chart.

I find it that people are comparing apples and pears. Value per pip is one good way of looking at it, but I’d rather look at it as percent. Then it doesn’t matter how many contracts you trade, or the size of your trading account. The contract size would be based on your risk management, whatever that may be. I rarely go above 1.5-2%

I hear you - I calculate my trading size based on value per pip. That decides how many contracts I will enter based on my risk exposure. But that is secondary to my original question - how many percent (the sum of positive and negative outcomes per year) can be expected in currencies? Stock market moves much more than currencies historically per year.

My backtesting is done since 2014 on a system that trades 8-15 times per year. Win / Loss ratio 60-80%. I have one or two drawdowns of 1.5 ATR. I may have one or two trades where I exit as they turn against me. Majority of trades hit TP1 at 1-1.5 ATR. My TP2 is dynamic and trails. It can be zero if trade reverses or it can be 2-3 percent on a trade or two per year.

With this method I can get 5-10% per year with limited risk. Since my trading is based on daily charts and we are talking ATR sized moves minimum, the spreads play a small part. They are accounted for as a percentage decrease of the total profit.

This is what I’ve done over all those years. If I can beat Buffet - great. Have I done it? Yes. Can I do it every year? No…

10% per year for one currency without leverage, risking a maximum of 2% sounds great. I will trade at least 8 currencies and maybe as many as 32. There will of course be completely different pairs that will have movement during 12 months that will add on.

Which takes me back to the question:

  • How many percent profit would you guys say is reasonable on swing-trading one currency per year without leverage. (without going into position size). :slight_smile:


Hi Bob, and welcome,
Your historical pursuits use the word “investment” whereas Forex is about “trading”. At risk of trying to teach you how to suck eggs, the former implies a long term hold whereas the latter is relatively very short term.

Most people do not leverage their “investments” since it is deemed very risky. By the same token, most people don’t go “all in” with their trading bank on one trading idea. Cautious traders who have a good capacity to listen and learn, or who have already blown up a bank (by trading their capital to zero), will learn on School of Pipsology and elsewhere that successful trading is all about probabilities, and being able to back test the result of a trading plan to obtain evidence that this plan could have a trading “edge”, or to make a profit not a loss. Most traders use anything from 0.5% of their bank as a single trading risk, up to perhaps as much as 5% of their bank per trade. So let’s say that in one month you decide to trade a total of sixteen trades, each being held for no more than one trading day, with a maximum of two trades open at once. Your total risk at any point in time is 2% (two times 1% of bank trades), and your trading objective is to take profit at three times your risk. Four trades win and four trades reach the stop loss and lose. You have won 3 x 1% on four trades (12% of bank) and lost 4 x 1% on the trades that hit your stop loss (4%). So the net gain for the month is wins minus losses = 12% - 4% = 8%. Now if you can achieve 6% per month you will double your bank each year (if you don’t take any income to live off). Most people who have been on here for a while will tell you that the first objective should be to learn how NOT to lose money, so the advice is to backtest your trade plans to determine if your profit is >0 consistently, then only trade in a live account when your trading plan is proven to have a positive edge. Easier said than done. I hope this helps.

This is like asking,

how many percent profit is reasonable trading bmw 3 series’ all year if I buy without a loan. ( without going in to the value of it )?

I wouldnt know how to answer that.

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Not bad mate, just depends on what you intend to achieve. I mean what your monthly targets are. Having said that, there are highs and there are lows. It’s nearly impossible to maintain consistency.

It’s not bad but obviously using leverage will increase it furthermore.

I target 30% per year. A lot of the time I get better from this target.

I think the less you target %, the more relaxed you can trade. Making money may not be the main goal. You need to be emotionally relaxed.

Depends, if you aren’t satisfied with the profit margins, there’s some need to check into your strategy. As far as leverage is concerned, I wonder why you hesitated in taking one. Not that you should go for high leverage, but believe me, 2% leverage is decent enough to get you going. Plus, I think a trader who doesn’t take leverage stays small unless he already has deep pockets.

There are no particular profits that you can make in the forex market. With every trade you enter and exit, you make different profits. You also have to make changes in your strategies every time you trade. It is all about making changes as per the market and currency you are trading.

Enter Profit is profit meme, btw backtesting has no power here ,do it live ,make it real and youll know the answer

Well, I guess that traders should strive for at least 20-30% per month. Actually, I personally try to strive for this amount, because in other ways the trading activity doesn’t deserve to be considered as the profitable activity. I think like that. Of course, 5-10% per year is okay, in case you deposited 10k, you will gain 500-1000$ per year. It is also can be considered as your income, but I think it’s too small for a trader. Everything depends on your style, if it’s swing trading then perhaps it’s okay, but every trader deicde by his own whether it’s a good sum of money per year or not. I don’t think it’s a good one.

Well, it depends on your personal wishes and what do you want to get from trading activity. Of course 5% of anjnual return is too small, however it also depends on your deposit. If we speak about 100k$ deposit, then 5-10% it’s enough for you to live without any second thoughts. If you really want to upgrade your skills try to trade with leverages. In case you have enough experience you can start trading from the smallest leverages which are avaliable from your broker. I guess it will be a good progress for you and maybe you will earn much more money.