Making a Living from FX Trading, Realistically

I am new to FX Trading. I’ve been doing research for about 5 months and demo trading for about 2.5 months. I have executed about 35 trades and I am up about 1% LTD. No large draw downs. I’ve been using stops and limiting each trade to 1-2% of capital. Mostly swing trading, 1-4 day positions.

I understand that FX trading is difficult and it is not a get rich quick scheme. I am willing to put in the hard work and I want to make it my main career…I just wanted to get an idea on the realistic expectations of making this work.

For instance:

  • What amount of capital do I need to start with? I’ve been contemplating about $150,000 USD.
  • How many pips should I realistically expect to achieve? Daily, weekly, monthly, etc.?
  • How many trades should I execute?
  • I realize these answers could be different for day trading vs. swing trading, so please answer based on your own experience.
  • I’m inclined to focus more on swing trading because that is where my focus has been initially, trading while also working full-time. I’ve been using the four-hour and daily charts. However, I am not opposed to shorter time frames and trades.

A mathematical example (looking for guidance on its level of reality):

  • $150,000 account balance
  • 2 trades per week, each 1.5% of account balance = 100 trades per year ($2,250 risked per trade)
  • 50% wins / 50 % losses
  • 2:1 reward:risk ratio
  • Losses = $112,500 = 2250*50
  • Gains = $225,000 = 2250250
  • Net PnL = $112,500 (ultimately, I want to earn much more than this so I’m curious the potential)

As capital or number of trades increases, so does net PnL, assuming everything else stays constant.

How well did you do with your demo account? Do you have a trading plan and are you ready to stay with your plan.

You have asked really a tough question that a lot of people are looking for answer.

I have not seen any full time traders yet. I know they are out there hiding.

Every trader will agree that trading is a lot of HARD WORK.

In my demo account, I have preserved capital after several trades and used good risk management, so I view that as very positive. Unfortunately, I have not grown the account much, only 1% at the moment. I’m still learning strategies in order to implement them into my trading plan.

In my opinion $150,000 is a lot to start. I think $50,000 is good enough, even $20,000 is ok. But $150,00 is a lot of money for an initial investment. Start with $20,000 for 3 months, then move to $50,000 for 6 months and then go with the $150,000.

I think starting with $150K allows you to take on really small risk (way less than 1% risk per trade), give you a lot of flexibility in position management, and get used to the psychologically pressures of trading live. It’s easier to get bigger with experience and improved skills, rather than blowing out 5% - 50% of your account and trying to make it back with smaller positions and psychological damage.

You sound like you’ve really got your head on straight and are truly prepared to do this the right way. Goldenmember noted this in his thread and I’d have to agree given what I’ve seen: realistically, 4-8% per month is high-end elite performance. Even low-end, realistic expectations would leave you netting 20-30% annually.

Preservation of capital is ridiculously important which is why I say you’ve got the right perspective heading into this (as opposed to the ‘How long will it take to turn my $500 into $100,000???!!?!?!’ kind of mentalities). At the same time, there is a psychological component and that may weigh on you once you go live. Not to mention that 2-3 months of successful trading, while a GREAT start and points to longer-term success, is not necessarily going to mean longer-term success if the market environment changes enough to render your approach invalid.

A basic swing strategy like you say will probably be valid for a long time (as opposed to news traders who started to lose out in 2006-2007 as computer trading the news became rather popular and no human can keep up with that kind of speed).

In any event, I’d suggest that you have some sort of alternate income to cover basic needs for two major reasons:

  1. If your trading starts to falter (even if it’s just a month or two of acceptable, understandable losses - which will happen from time to time) you’ll still be able to cover the costs of living
  2. Knowing you have that security will allow you to keep the proper psychological alignment and not get too negatively impacted by losses

Now, given the fact you’re contemplating dumping 150k into an account, I’m sure the security issue isn’t a pressing matter, but it’s something to consider. Through whatever means it might be, having some sort of more guaranteed income on the side while you trade will be very, very, very helpful

Starting with your whole nut is crazy. Why not 10% of that??? If you can’t make your returns on 15K then it won’t magically happen with a larger account. Be profitable for an extended period of time and reassess.

Just my thoughts… Disregard if I am wrong.

Thanks for the responses.

My short-term goal is to learn the business and become a good well-rounded FX trader. My intermediate goal is to turn this into my full-time job so I can devote more time to it and leave my current career. My long-term goal is to make very good money. I understand capital preservation is key, that is why I plan on using strict risk management, small trades (1-2% of capital) and stop losses. I do agree that trading with a live account will change the psychological component versus trading on a demo account. I am mentally preparing myself for that and racking up the trading experience so I can learn to expect the ups and downs.

A couple reasons why I’ve been leaning towards a larger account balance: around $150k. Using FXCM as a broker, this entitles me to a special account status where I get smaller spreads and preferential treatment with additional research. I currently have this money in a stock/options account but I’d rather expand into FX and use it as springboard for full-time trading. With a plan of making this a full-time job, the gains on this larger capital base provide more potential to support me. Assuming I make enough pips, which I understand is not guaranteed. Just because I have $150k in an account, doesn’t mean I’m always going to be risking it. Like I said, I’ll only be risking 1-2% per trade and may only have 1-4 trades on at a time due to correlation risks.

That’s why I was so curious to get feedback on others’ average pip gains over different time periods.

I agree with you. My advice is always that you need to get to consistency first and not worry about profits. Have a trading strategy which works with you in a live account for an extended period of time. I don’t care if you achieve that with 0.01 lots per trade and only make 5$ per trade. As long as you are consistent you are on the right track. After you achieved consistency you can fund your account and trade much higher volume which means your profits will increase (give that all variables remain the same).

With that in mind, every trading day will be different and you can’t really make calculations the way you suggested (2 trades per week, this and that). Trading will be more dynamic and your performance will be much different day-to-day, week-to-week etc. I always have a monthly target in mind and I know what % I can net from my portfolio. It is only a rough figure, but most of the time I am around that.

Learn to be consistent first, throwing 150K or even 15K at an inconsistent strategy is not wise in my opinion. Consistency in a demo account is worthless so I would recommend you will not judge it based on that, ever!

I wouldnt be too concerned about Theorical calculations. as one can make up anything they like and its not based on anything real.
i’d be more interested in your results backtesting. you have traded 35 times and have a current profit of 1%. So what is your ratio of wins to loss.
what about average Win amount to average loss.
do you risk a fixed dollar or Percentage per trade.

It would probably be best to assume that this would be your best performance if you went live right away. with commitment you can improve your results.

Also i agree that you should only start with a smaller amount then 150k, its great that you have that much but start with way less like 10-20k. and when you have a profit for a couple of months add another 20k then another couple of profitable months add more. until your all in. Think of the other side, if you go in and start off with a 10% drawdown. Would you rather lose 10% of 10k ($1000) or 10% of 150k ($15,000).

How many pips. Well how long is a peice of string… there are thousands of systems, all with different expectancies. so the best idea is to test and trade your system and determine how much you can expect from your method.

How many trades. same answer above.

Seriously asking others for their ideas wont help you determine your expectations. if anything it will give you false expectations, and high hopes…

With FXCM, to get the better spreads you only need a traders account which requires you to have 25k. The “vip” status you are talking about requires you to have 100k and doesnt offer much other than a direct contact and extra help, reports, analysis if you need it. Needless to say, if you are trading this kind of money, you shouldnt need any sort of help…

I have a 100K plus account btw, so I would know.

Also like the others said, you can never prepare mentally for the stress going live will bring you. You have to get used to it over time. Going in with all your money at once is a bad idea. Get used to loosing small sums first, then ramp up. The account size you are talking about, you are looking at $1500-$3000 trades who can turn into losers within minutes, takes a while to get used to that. If you have one or two or three of those in a day… yeah.

The problem with trading for an income with a smaller sized account is that you put pressure on yourself to make money. If you’ve quit the regular income you get from your day job then this pressure is even more acute than before so it will most certainly influence temptation boredom, frustration and anger trades. Remember, the market doesn’t owe anyone a living. It will simply do it’s thing regardless. I always recommend people trade for capital growth and simply have it in collaboration with other income streams.

Thanks for the replies. I know a lot of people on here don’t see the point of doing calculations like mine because there are so many possibilities. I understand that, but I still like to get an average idea so I can understand what is possible under average circumstances. I understand there can be more negative or positive actual results.

I was thinking through my original calculations more and found something else I would need to account for. If I estimate 100 trades per year, that is roughly 2.6 days per trade (assuming 260 trading days/year). For each winning trade, I need to make $4,500 (which is 150k*1.5%*2). So I need to make sure there is enough pip movement in 2.6 days (again, on average) to make that type of gain, assuming a 2:1 reward:risk ratio.

Just curious, would you mind sharing what kind of trading you do? Day, swing, long-term, algo? How long have you been doing it? What type of general results have you had?


THIS IS EXCELLENT ADVICE! Perhaps if someone said this to me, I’d be way ahead. Why start low if you have so much capital you may ask. I’ll tell you it comes to one thing, EMOTIONS. If you don’t FULLY trust in yourself and your strategy you use, your emotions will destroy you! I started off with $30000, after a few winning trades I was like booyah! Immediately I doubled my capital thinking I was on my way, then something happened. One bad trade, tehn another, then another and so on. Confidence dropped, what was going wrong? I started to let emotions kick in, one straight month of losers and before you know it, 50% of drawdown in my account. WTF?! Then like that popular saying “You better check yourself before you wreck yourself”.
Now I’m doing better, slowly digging out. Point is, start with $20000. Condition your mind, your logic and your emotions. Go thru some losses, stay strong with your plan. Once you know you have your emotions under control slowly increase your capital. If only (another popular phrase you MUSTN’T get hung up on) I started and stayed with my initial investment for more than a month and experienced drawdown on a smaller scale I would not have panicked like I did looking to quickly earn back my losses.
In the end though, everyone learns differently.

does that mean you can theorically make 112,500$/year in profit with a 150K account balance and all that with very low risk ?
i’m sorry if this is a dumb question, i’m very new to forex


Not really. Forex always has a lot of risk tied to it, there is no way around that part.

I was just trying to simplify some numbers to see if they made sense from an average perspective. I think my logic is a bit flawed in that case because I assumed 100 trades per year. In order to execute 100 trades per year, they would only be open about 2 days on average. Getting the necessary pip movement in 2 days per trade would be asking a lot (on average) for that to become a reality.

What I’m having a hard time understanding, is how so many people claim to make a living trading full-time. If a lot of people have portfolio capital < $100k, how are you making returns high enough to support yourself full-time. I understand, probably a small majority of people do this for a living, but nonetheless, if returns of 20-50% are considered excellent by most hedge fund managers, that only nets you 20-50k per year.

Hedge funds and retail trading are two completely different entities.

Yes 50% in a year is considered great for a hedge fund, but one can also make a few hundred percent gain on a retail account rather easily in a year, if not more. Try to not get confused and exchange the meaning of a hedge fund and retail trading for the same thing, because they are not.

[QUOTE=“Jezzode;563522”]Hedge funds and retail trading are two completely different entities. Yes 50% in a year is considered great for a hedge fund, but one can also make a few hundred percent gain on a retail account rather easily in a year, if not more. Try to not get confused and exchange the meaning of a hedge fund and retail trading for the same thing, because they are not.[/QUOTE]

Jezz - thanks for the response. Can you please expand on that? I realize they are different but what allows you to make so much more in retail without increasing your risk to a much higher level? Most hedge funds can and do trade in the fx market so what prevents them from higher returns that a retail trader is capable of?

It’s not that I’m questioning your experience, I’m just trying to learn more about the potential and reality of the retail side. I’d love to learn more about what makes your statement true.