It’s very motivational to be able to set a nice target to work up to, even if it takes years to get there. It would be very de-motivating to find out the best traders only turn over a few percent a month.
I heard between 5-10% a month is realistic, is this true? (once you’re experienced)
Also on a side note, is Forex still a good market to be investing in? Because I heard after the 08 crash things have been getting a bit quiet… as in currency pairs seem to be showing less movement (80pips) compared to before it (100-130) pips a day.
I remember in forex school that the numbers were still above 100, did the 08 crash leave any permanent damage on the Forex market?
Just random questions xD, no need to answer them all
Realize it’s commonly accepted that the highest paid, well-suited hedge fund managers in Wall St. tout 11-20% / year in returns.
Not saying cap your potential, but, I’ve always been a fan of focusing on the process, not the results.
In other words, instead of asking the community what type of returns are realistic, create your own strategy, demo test it, and put some money on the line in the markets.
Your strategy and your ability to trade will tell you what type of returns are realistic.
Any system with less than 6 months of application in a live trading account, in my opinion, is unreliable.
Hit the 6 month mark, pull down consistent profits each month, keep your drawdown < 15%, average win > average loss, decent sharpe ratio and profit factor, and a clean risk of ruin table and you have something on your hands to write home about.
Do you mean the hedge funds themselves earn 11-20% yearly returns? Yeah, I had the exact same thought process as you when I used to think about this stuff too, but then I thought (and read online) that actually us retail traders can beat that amount, because we risk 1-2% (or more) in a single trade, whilst they risk muchhhh less of their billions of dollars in each trade. I mean it’s understandable, they don’t need as big a return to make tons of money, whilst we do, so we need to put more of our equity up for risk in each trade I guess? Plus 1 or 2% of money we can afford to lose isn’t that much to risk, but for them, if they lose 2% they’ll probably have a lot of people worried about where those millions of dollars just went.
What’s your opinion on that thought process?
Also, yup I totally agree, it’s definitely better to find out what I’m able of earning myself, than asking other people and potentially using their earnings as guidelines…
But honestly, I will do that in good time…but just to give me the motivation to do it I honestly need someone in this forum (because I don’t really trust other forums) to tell me… you know, how much a good experienced trader could expect just as an average number, to earn a month. Or something along those lines.
Nothing specific. But I just want to know that yes, people can make good returns each month with Forex. If it’s only 10-15% a YEAR than yes, that beats any bank, but honestly a guy like me, that isn’t sitting on tonssss of cash, Forex will become useless to me for years to come. I can increase my earnings by more than 15% a year by other means.
I have faith that Forex does bring in much larger and much more life changing sums of money over the long term, and with enough work that can become a reality, but that faith needs renewing from time to time.
Look, I’m not the expert here by any means, and I’m simply regurgitating what has been passed down to me because logically it makes sense. If something isn’t logical to me, I don’t consider it.
Think about the numbers you hear quoted so often regarding how many retail traders are actually able to avoid blowing their account. Figures are commonly accepted at a 80-90% kill rate. In other words, 80-90% of retail traders (you and I) will completely empty their account (some, many times) and give up on trading. I believe this figure to be true because:
a) I’ve been around on many forums, and see the majority of newer people making the same common mistakes (over leveraging, under funding, over trading, not taking trading seriously, under educating, etc etc)
b) I’ve heard the number used in many books
c) I’ve heard the number used by many professionals whom have been trading for 10-15+ years
[I]In my opinion[/I], if you’re so focused on what the average return is that you can pull down, chances are you’ve already set yourself up for failure. “I can increase my earnings by more than 15% a year by other means”. This is not a mindset which is properly setup to climb the massively gigantic learning curve of trading. If that’s the case, then I’d recommend you save yourself the intense emotional stress ahead of you and just employ those other means.
From the onset, those who are focused more on completely enveloping themselves in the educational process, and less on the monetary gains, are going to be eons ahead of the herd. The money will come- not overnight, or even in a year. You’ll blow an account, or two or three. We all have- it’s part of the learning process. My best piece of advice- forget about the earning potential, and focus on the learning potential. Challenge yourself intellectually to learn one of the hardest and most misunderstood endeavors of life.
Trading is not about money, or stock dividends or earnings or central banker speeches.
It’s about conquering yourself and your emotions, and learning that trading is more of a psychological challenge than anything else.
It’s not you vs. the market.
It’s you vs. you.
How much money do you have? I have only about 50K in financial assets, and I put 15K in with a broker, and let me tell you, I’ve had all the volatility I need. You don’t need hundreds of thousands to get started. As little as 10K or 15K is enough to see something meaningful happen.
I’m gonna say you shouldn’t count on 10-15% a month, so don’t. And even if you could average that, you’re gonna have up months and down months, so don’t be reliant on that 10-15% to eat and pay rent. Don’t get involved with money that would ruin your life if you lost it, because you could lose it, that can really happen.
And it is highly variant, so make sure you have the gambling spirit with you. If you’re going to freak out at losing $500 or $1000 you probably shouldn’t get involved. It’ll be too much of an emotional roller coaster for you. I was talking with a coworker who quit trading stocks because he lost 5K. This is a guy who makes 6 figures, 5K doesn’t mean anything to him in terms of financial security, but his worries are not uncommon. Not everyone can deal with gambling or high variance, make sure you can if you’re gonna start. I just started with real money on Tuesday, on Wednesday I had one point where I was down nearly $800 in equity, after being $700 up a few minutes earlier (the Fed thing if anyone’s wondering how that happened, was USDJPY long and AUDUSD short), you can’t let that scare you away (though you can be annoyed by it).
By the way, my trading experience is 0, so don’t go on my advice. I think I got some things figured out a little, at least as far as what risks I should take and what I shouldn’t, but that’s not really forex related. I’m also gonna say, if you’re new to gambling/highly variant returns, this isn’t the easiest place to start. Being on leverage makes things a bit “scarier” than other forms.
I wholeheartedly agree what Forexunlimited has said. Personally I think it’s realistic to expect somewhere between 2-20%. But prior that like forexunlimited said you want to have solid data to support that gain that is at least 6 months of live trade performance.
Being a fairly new trader myself I have thought about what is realistic gain in % each month many times. It has been on my mind even before I traded live. I’m only in my 3rd month of live trading and I agree with forexunlimited that you should focus on progress than results. Though I feel like I’m getting there, I’m nowhere near where I should be to sit down and bother myself with realistic monthly gain. So now I’m not even thinking about what ifs and thats.
However my goal is to increase my winners>losers ratio and bring up my monthly then quarterly loss into the positive %. Once I’ve accomplished that and see myself being consistent. I will then only start worrying about gains.
Your problem here is that babypips is full of new traders and not experts. There are probably a few experts who do read here but they keep their numbers to themselves.
Look at all the signals out there and they are not making 100% a year and many are using lots of risk and martingale systems. Those who do not (lets use johnpaul as an example as you can see he trades here Copy trades of the ‘Johnpaul77’ trading signal for MetaTrader 4) is usually earning less than 5% a month with the occasionally really good month. I consider that account to be of a very good manual trader. If you can even do half of what he does then you are probably going ok over a year.
5% avg/mo. for me for about 2 yrs. But I also risk 3% account per trade. Study up and go your own way. Aside from providing liquidity to the market I honestly couldn’t care less what others make. Has nothing to do with me
whether 2%, 5%, 20% or 100% . It’s dependent on the trader’s experience and attitude. Realistically- 15-40% is consistently achievable with a good account size -30-50K . If not keep learning and trying, you will certainly get there
Plenty of e-stats in these type of threads, with no substance behind any of the claims. Unless someone can post up a verified myfxbook account you should just assume they are lying or parroting something they read elsewhere.
Very few traders make 5% per month. That’s almost 100% per year. The ones who come into the market with the goal of ridiculous returns usually just blow up within the next year or two. It is possible, but don’t expect it because it is not probable.
Well then you should probably quit now, because that’s the reality of it.
The stock market returns 7% on average per year with ~50% drawdown. If you can provide slightly better than that, you will be drowning in investor capital. See: Bernie Madoff, who raised $42 billion in funds for claiming only a 10% annual return. That is 1% per month.
You can listen to the pipe dreamers and the liars, or you can face the reality of the situation. Very few traders make any money at all in the market over the long-term. Even fewer beat the S&P 500 index. Still fewer are creating the returns that you want. Focus on breaking even, and then you can worry about making a steady return.
I think it is rather difficult to quantify expected returns without taking into consideration one’s risk appetite, strategy, capital invested and leverage used…I know some traders specifically trading only micro-lots but using very high leverage and making in the region of 35% returns per month. I certainly would not compare returns on trading forex with returns on equities or the market Index, as it is a complete different science and in particular there a key differences in the leverage available, liquidity, transaction costs e.t.c.
Am I missing something here? if you have a strategy which is profitable 60% of the time, with a 1:1 RR and you take 10 trades a month, risking 1% of your account (irrespective of its size) on each trade, then you will have a monthly return of 2% or thereabouts.
Sounds great when you put it down on paper like that and read it aloud.
The whole “my strategy is 60% accurate, I trade 10x a month with a perfect 1:1 RR and only risk 1% of my capital on each trade” mantra is rarely executed properly as often as it is touted in forums.
You’re not missing anything.
It’s just not easy at all to be able to make such a claim like that (and prove it more importantly) when you’re just starting to learn how to trade.
Key word in your second sentence- [B][U]IF[/U][/B].
BIG IF.
You need to have immense discipline to execute a strategy as you’ve laid out.
Heed the words of ForexUnlimited! Then consider this:
Can you find three good 3 to 1 risk to reward ratio trades per week? Not too difficult
Can you be successful on 4 out of 9 trades? Not too difficult especially if you graduate from the School of Pipology!!
Can you be disciplined enough to only risk 1% of your account per trade? Believe it or not this can be the hardest part!
Once you can say yes to all that you’ll be earning close to 2% per week or over 8% per month and will come close to tripling your dough every year! You’re 4 good trades will net you 12% and your losses will cost you 5%. That,s a 7% gain every three weeks.
Thats my money management scheme and I’m averaging 1.88% per week. Not quite 2% but I’m thrilled. Good Luck and Good Trading!!!
You need to have immense discipline to execute a strategy as you’ve laid out.
It also seems that the strategy may be silly as well. As a trade has been opened for more and more time, you get more information. If you’re half-way to your SL and you now believe it has a 90% chance of hitting SL and only 10% chance of hitting TP, why would you keep the trade open to let it hit SL?
Because many traders will boldly and fearlessly (foolishly) stand in the face of the market when their trade goes against them. They will hold out hope down to the last tick above their SL. “It just [I]has[/I] to reverse,” they will say.
Ironically when in profit, they will sit there and chew their fingernails and ultimately end up taking profit way too early.
Unfortunately, I think you may have misunderstood how the industry works. 2% is 2%. Doesn’t matter whether it’s 2% of a billion dollar fund, or 2% of a $10k retail account.
What you need to remember is that those funds are actually made up of lots of smaller accounts (not $10k small, but maybe only a few million each), so the 2% loss is actually just a $20k loss for a hedge fund investor with a $2k account.
There is arguably an advantage that you have as a retail trader over fund managers . . . They all have strict mandates governing what they can and can’t do, and when they enter or exit positions they can move the market significantly against their favour. You’re much more agile, as a small size retail trader.
On the other hand, they probably have far better research and resources, better quality of information, faster, cheaper, and superior execution capabilities . . .
So it’s all swings and roundabouts really.
But 20-30% is a realistic target. And remember, this is an average performance, over many years. Of course there will be years where a trader or fund significantly outperforms this (100% + returns), but there will also be entire losing years.
To get an idea, have a look at something like the monthly returns for Dunn Capital:
To be honest, if you can just [I]match [/I]the S&P, but without the volatility and drawdowns, and with a scalable strategy, then you should be able to attract investors . . .
