Hi. So i got a little confused. Here’s why:
I hear profits vary alot so i did some research on what to expect.
Now i came across a professional trader. He works for a prop firm and makes an year average off 26%
Does this mean:
Or
Thanks.
You can’t mathematically go from just the figure he gave you and work back to how big his account was and how many trades and what was his risk.
You do need to know the starting size of his account and also his win rate, as well as the % capital risked per trade, plus the realised risk:reward ratio.
But what good is this if you don’t also know his strategy and can’t replicate it?
I think u dont understand what im after.
I dont care about his statergy nor how much his return/profit is.
I want to know how forex traders measure their profit/return.
Like in the example above.
OK, sorry.
Yes, return is calculated as the profit per time period expressed as a percentage of the capital used over the same period. So if your friend’s return is 26% per year, and if he has $100,000 in his account at the start of the year, he has made $26,000 on top of that.
Ahh ok thanks. I didnt mean it in a bad way it came out a little blunt. So no need to say sorry!
But if that is true. How can someone make a living out off forex without owning at least. 300k.
After lets say 5 years of practice and saving up 300k and make %20 profit. You would get 60k per year.
That is not the best time/money/roi/businessplan.
I have the idea im missing something…
Sorry for my dumbness.
Thanks.
I tend to agree that 26% per year is poor.
I have gone on record advising traders that if they can’t double their accounts in a year, and make 100%, their trading is too risky to continue with. This assumes they have completed whatever learning and research and demo trial trading period is needed, and that will vary immensely.
How can that someone be apart of a prop firm. I was thinking about this.
Guy makes 26% per year return.
Prop takes 30%. That would mean the prop firm has a roi off 7.8%.
I think a firm with so much capitol could do better than that. With all coaching learning and other expenses.
Or am i just all wrong on the 26% and i have mis interped that person.
I don’t know anything about prop traders and their firms. He might be their star trader for all I know.
So your saying. You should get a return off 100% a year?
Thanks
Before even thinking about trading for a living, you need to have:
Consistent means, that you will get more or less the same results through many years of different market environment. Capital part depends on what you can expect from Forex market. I would say, that expecting (consistent) 30% year to year is VERY optimistic. With making 100%-200%-300% a year more between fairy tales and one offs. Still, as you want to LIVE from forex you need to have some financial cushion to cover your costs during hardships.
So in my opinion, making “trading for a living” as a goal is not healthy. You see hundreds of traders on forums who want to quit their job or stop looking for one and just trade… But can they make consistent 2k yearly? I don’t think so. “Make forex a steady additional income source” - that’s more like an achievable statement 
Hmm thats a turn the other direction 
Do you have any thoughts on prop firms?
Hi, i have done some research. The all time best trader for goldman sachs. Made 46% annually.
All major investment firms average out on 25-35%
How can you advice a newcomer to quit trading if he cant double his account within a annum?
I dont mean to insult you in any way. Im just curios what your stand is on this.
Edit: Is this maybe they are on a much safer route? And is this very different in retail traders? what are your own experiences?
Thanks.
I say nothing about the returns of prop firms or Goldman Sachs or any major investment firm. My area of experience is private retail trading.
I understand. But i take a highly trained team of professional traders there average return rate as reference as this is the only thing i can take for granted because the firms have to make these things public.
I would suggest a retail trader wouldnt make much more % than a trained proff.
Do you maybe want to share your personal experience in this regard.
Your years of trading and the % returns u accomplished annualy?
If you rather not share this information i can understand and respect it.
Thanks in advance.
Itll be 26% return on capital so number 1.
I have no idea how professional traders at prop firms trade or what they make in returns. And unless I trade exactly like them, which seems really really unlikely, its not highly relevant.
My argument is that a lot of traders enter our field hoping to make a few bucks a year, quickly and easily. They don’t learn much, most of them wipe out and leave before they have a chance to become experts. But what they mostly do appreciate pretty quickly is that the r:r on a trade shod always be better than 1:1. So whatever you risk will be equalled by whatever you can gain. This is because only a fool, they will say, would risk 100 pounds to make less than 100 pounds.
My argument covers both these positions. Firstly, trading is too hard and too unfamiliar to be a side-line for a few bucks. You need to either be fully in or fully out.
Secondly, just as new traders are taught never to risk more than they can gain an individual trade, the same principle must be applied to their account over a year - they should not be taking the risk of a 100% wipe-out, which has a high probability in the game, unless their system sees at least the possibility of a 100% gain to balance this risk.
I don¨t think so. I think you are actually ahead of the game with your understanding of this. You are right, you need a lot of capital to make a living without taking huge exposure risks. And huge risk-taking does not normally continue very long, especially when you are drawing a salary from your equity each month.
Like has been said somewhere:
“There are old traders and there are bold traders, but there are not many, old, bold traders.”
Thanks for your effort to reply! I understand your standpoint.