Ok so as a beginner this is going to be a very silly and beginner question but what do you guys mean when you say you will make 2% a month or 5%? So if my capital is £300 and I say my monthly profits will be 5% doesn’t that mean my money will be £315 with the increase of 5%?
2 Likes
That would be my understanding of the statement.
2 Likes
It sounds too little right?? 
You should be happy, atleast you made a profit.
2 Likes
Hmmm! - who is saying that ?
Yes it does - if you take the advice that way !
However, as with all things “Forex” there are some thisgs which are stated as “rules” which sound good - but maybe a little closer look will help ?
I’ll invite the other respondents in as well @cigarmanstan and @Maximus_martins
There’s loads of “stuff” which you have to get yur own head around here.
Now say you were going to have an afternoon in the betting shop and fancied a horse or two (And make no mistake - as “Newbies” - you ARE “Gambling on horses” by “trading Forex” )
Now would you take $300 and give it to the bookmaker so you could bet $6 on a race ? where your horse was quoted at 5-2 ? ie $15 if your $6 bet wins ?
OR would you more likely say “Ok I’m prepared to lose $300 on this bit of fun” - and I’m wanting to have a few $6 bets this afternoon, so here’s $30 and we’ll square up later ?
Now if you ended up the afternoon with $15 profit, Have you made 5% on the $300 - or have you made 50% on the $30 ?
Have a think about that and then perhaps we should wonder why we should put ALL the money we are prepared to lose into the Bookmaker’s bank account at the very beginning of our Gambling ? 
ANd why we should compare our winnings if our gamble pays off - with All that money which we have never bet ?
5% monthly return means 60% yearly return; it’s not a bad return for sure! You should happy, if you are consistent.
Who told you mate? There is no guarantee; it really depends on your own trading skill.
Well I think you should compare apples to apples. In forex each trade is based on two pairs. Not 9 horses. The price of those two pairs move up, down or sideways. That’s not how a horse race goes. You’re picking in a horse race is based on odds. Your picking a trade is based on probabilities. Probabilities are usually given as percentages. Odds are a ratio, and can be given in two different ways: ‘odds in favor’ and ‘odds against’. ‘Odds in favor’
So to compare in forex RR ration is based on odds 3:1 etc, The probability that a pullback of a trend is 65% or more is a % based on his history q reversal of the trend
Not the same
" Have a think about that and then perhaps we should wonder why we should put ALL the money we are prepared to lose into the Bookmaker’s bank account at the very beginning of our Gambling ?
"ANd why we should compare our winnings if our gamble pays off - with All that money which we have never bet ?"
Because if you bet with a horse bookmaker, you are not required to deposit your $300 only what you want to bet if it’s $3 or $300 that’s all you have to front.
In the foreign exchange you are required to deposit a sum and trade from that sum. You can’t bet your total account,only a %. So you can’t use the same comparison
1 Like
Yes this is correct!
Consistently getting 5% a month is equal to an extra 79% a year because of compound interest!
That means using £20,000 for a year will end up with £35,917.12!
Equation at bottom.
Also, the goals you set each day, week, month etc depends largely on your trading plan and style. If you trade the day charts and only take 5 trades a month, it’s unlikely you’ll be consistently making 10% a month. You’re risking less and you’ll be compensated less.
However, if you’re a dedicated scalper with 6 hours a day towards 50+ trades a day, chances are 10% is a poor-mediocre month for you.
Which type are you? Who knows!
Babypips.com has a lot to say on the topic 
Undergraduate - Junior - School of Pipsology - BabyPips.com
Compound interest calculation
Amount = Initial Deposit (1+ Monthly% Profit)^12
Amount = 20,000*(1+.05)^12
Amount = 35,917.12
If we’re going to be pedantic, each trade is based on ONE pair !
Odds, probabilities and ratios are ALL capable of being expressed in terms of each other or if you like in “percentages”. In terms of the way we gamble as long as you know what they mean, it doesn’t really matter HOW you think of them.
That is true - BUT the sum to be deposited is YOUR choice - What percentage or ratio or amount of that sum you bet on each individual outcome is YOUR choice - the only restriction is that your bet cannot exceed the leverage restriction of the “Bookmaker”. (in fact they are not resitrictions “of the bookmaker” - they are legal restrictions imposed ON the bookmaker by “governments” - in the uk this restriction is 30 times the notional risk of the bet [ie value with a $334 account one could theoretically control $10,000 of “asset” ie trade approx 1 mini-lot at $1 per pip] - in the US it is 50 x so $300 could theoretically enable a larger bet on $15,000 of asset - so 1.5 mini-lots. or approx $1.5 per pip.) - In some countries and in previous times in the West - It WAS quite possible to bet your whole account size and “Margin Calls” were quite normal.
Now that may all be very confusing to a “newbie” but none of that has any relevance to the point of my post - which was simply to point out that the return on a trading account, whether monthly or on any other timeframe, is often expressed as the “monthly return” on the account when the whole account was never at risk.
So my point was that perhaps instead of looking at the whole £300 and assessing your % return against that, perhaps we should look at the BET SIZE we want to trade and either reduce the account size to enable those bets to be taken with a reasonable degree of likelihood that we would not have to refund the account due to normal drawdowns OR to calculate the reward against the actual amount of the account which WAS actually at risk !
Analogies are to teach a different way of thinking about something. They don’t NEED to be Synonymous.
True a 65% probability is (Approx) 6-4 and would require a mathematical advantage in Risk; Reward greater than 4;6 to be worthwhile. 1;2 or 1;3 would be good 
They should if you’re trying to teach someone who is new, of course that’s just my opinion. Far as the rest of your reply, it’s much clearer than what you said in your original post and agree with you
“So my point was that perhaps instead of looking at the whole £300 and assessing your % return against that, perhaps we should look at the BET SIZE we want to trade and either reduce the account size to enable those bets to be taken with a reasonable degree of likelihood that we would not have to refund the account due to normal drawdowns OR to calculate the reward against the actual amount of the account which WAS actually at risk !”
"Let’s not use “pedantic” such a big word for us uneducated old folks.
Anyhow get your point and agree. No disrpect for our opinion intended
Gp
1 Like
Ok mate 