Would it be realistic to achieve a consistent 1% return each month after a year or so of trading? I would like to trade steadily and build my wealth over a long period of time as opposed to trying to make as much as possible. I’m very risk averse in that respect. I would, however, prefer to trade forex over simple investing. Forex is becoming a hobby more than anything.
Thanks!
If you are so risk averse why would you want you trade forex?
Just put yourself into some choice ETFs and you will out perform 12% annually.
The first few years of forex trading are fraught with difficulty, you are not likely to even be profitable after one year.
However if you stick with it you can be looking at 12% a month or more not a year.
I understand what you are saying, but I trade forex for a hobby as well - it’s something you can never really stop learning.
To be realistic you could earn 12% APR by investing your money into an index linked US fund such as Fidelity ZERO large cap index or Vanguard S&P 500ETF. That would meet your long-term criteria.
So a 12% APR return on Forex, while being risk adverse, IMO, is a complete waste of time and effort - even if it’s only a hobby.
Which is not the approach that brings financial rewards long term, because if you’re taking forex seriously, you need to treat it as a business - not as a hobby.
It could surprise you that I have the same outlook on being risk adverse as yourself, but my lifestyle is geared round my Forex ‘business’. And I’m aiming at gaining returns of +20% APR.
Best of luck.
Trading is very hard work, both mentally and emotionally, partly because the ways to succeed in trading are so different to the ways we have been taught to succeed in education and other professional roles. It isn’t worth trading unless you’re serious about aiming for much more then 1% profit a month.
actually, how many returns will come from our trading it depends on money management, without strong powerful analyzing money management there is no chance to bring 12% return at all.
for sure. Thats a monthly attainable goal.
I agree. The work involved in Forex can be mentally draining. I can’t say it is an hobby when my personal money is involved.
It depends on your personality. I know people who blow thousands in casinos. Rather forex than attempting to count cards.
Maybe I have set my initial expectations too low. An annual return of 20% would be quite significant.
Can you show me a trackrecord of someone doing that?
Dunn is doing just 12% annualized and is one of the best.
I know your itching to see my performance - it’s not the first time you have asked (although this time indirectly).
No point, I have nothing verified and don’t even use Metatrader.
I do think though the law of large numbers makes it harder for large funds to maintain exceptional returns.
I know I’ve stated this previously though too, there is nothing impressive with a 12% a month return if you are using leverage.
Nothing whatsoever
It would be interesting to know how much risk these funds take per trade and how often.
If it’s the accepted norm to risk 2% per trade in forex and it’s likely you can lose all of it in one day, then I just can’t figure why anyone would be happy with 12% annuallyj
How many years have you returned 12% per month?
I am not speaking about you but in general, if it would be possible I would find several verified trackrecords with 100% per year and 2 or 3 consecutive years.
yes, absolutely possible
For such low returns as a goal I would look at numerous other less stressful ways of making money for sure. Trading takes a long time to get right I accept but the juice has to be worth the squeeze.
How can you say that? Where is the evidence?
I understand than many people do not use metatrader but it is the most common platform for forex and nobody is able to show a couple of years with this kind of returns.
I am also risking 2% per trade and probably also Dunn, he has a max DD of 30% so it is not low risk.
I agree that is much more difficult than holding a portfolio of ETFs but this does not mean that it has to be more profitable.
A friend of mine has been a pro trader most of his life. He manages two forex hedge funds, and private clients, using IC Markets & Metatrader. I’ve reviewed his annual returns for several years, and it’s consistently over 20% APR, which he regards as being optimum for the size of his business.
And to get that he has state of the art servers as used by Goldman Sachs based on Wall Street, NY, has seven algorithm strategies for different market conditions, and a small team of researchers, and an IT guy. Guess who’s at the top of the broker’s pile when executing trades?
For those of us just playing around with small live accounts, it’s a different world, but nevertheless I’ve been running at over 20% APR for 5 consecutive months now. So it can be done…
Hi Cyberla1190,
I have read most of the responses to your question and find many of them a little lacking in understanding that everyone is different. Just because many traders aspire to achieving double digit annual growth (or triple digit) doesn’t mean they will do so consistently in all market conditions.
I have a close colleague who, seven years ago used to say the same. He didn’t understand why anyone wasted their time - he had used the same broker for 10 years and consistently returned over 15% per year compounded for over 10 years. He had nearly USD1M invested. Then he told me he was 65% invested in Russia. Five years ago, he stopped talking about his broker and his investments.
About the only very long term asset we have held has been gold, and I can tell you it has returned just shy of 7% per year over nearly 30 years. But I still consider that to have lost purchasing value since my personal inflation over the year has been between 6.5% and 7.5% per year.
Whilst I aspire to doing better than 12% per year, it has been my experience over more than 30 years that this is not possible invested passively. If I believed I have an edge that would give me a 12% per year compounded return for < 10% drawdown, I would be 75% invested in that pursuit. As it stands, I have not yet found that nirvana. We do have three independent sources of income though, soon to be joined by a fourth (a pension), but I have always said that by the time I retire, there won’t be any left for me to have. I am just waiting for the means tested pension laws to kick in and still expect no pension. Better to be proven right than wholly disappointed. Good luck with it. And try some unleveraged trading just to get a feel for it. You can do unleveraged trading without setting stop losses, and that is worth thinking about.
It is possible to achieve consistent results each month on average. And it is certainly possible to achieve more than 1% return per month on average.
The reason why I have already mentioned “on average” twice is to highlight and emphasise that our return is not solely dependent on our system/method/approach. It is also dependent on what the markets offer us.
The character of market movements varies over time and often quite dramatically, both in terms of distance and volatility. It can trend, gently range, oscillate violently, or even just stagnate. We cannot always anticipate these changes in advance and our methods are usually designed to perform better in some market conditions than in others. Therefore we cannot expect to always produce a steady result from one month to the next indefinitely. There will be better months and worse months and even losing months.
But this issue is not an “either/or” situation between forex trading and other investments. You are enthusiastic and risk averse. These are very good qualities for trading over a longer term where many seasoned traders advise that “more is less”. It takes patience and discipline to always wait for the top class trade set-ups and many losses occur from intuitive or high risk trades that are closer to bets than trades.
I would suggest a better approach would be a hybrid approach in which your trading is treated as a capital generator. And whenever your gains reach a certain level you draw out the excess and place it into a more traditional form of investment. This will grow your investments over time and leave you free to focus on your trading here and now and not be concerned with the long term issues in trading environment.
I would also suggest that you steer your trading to longer term like daily charts and refrain from being drawn into short term intraday trading. This will guide you towards fewer trades for greater rewards and with more reliable signals. In this environment it is easier to maintain discipline and remain focused on your objectives. This is a preferable situation for someone treating trading as a hobby. It also gives you time to learn about the peripheral aspects of the trading industry, the countries involved, the dynamics of currencies and commodities and so on.
Trading shorter term timeframes demands considerably more time and effort and will not be cost effective over the long term and can easily lead to frustration and risky trading.
20% per year can be done.
Being above that for some months doesn’t mean nothing, you can return 20% in a quarter and that be back to 0 the next one.
30% or 40% can happen one year, it happened to me, but what can be done consistently on 3 or more years is between 10% and 20%.