ROI% expectations

Beginner Questions
1

So… I know, this has been asked again and again, and never there seams to be clear answer. But I have to try once more to get some peace of mind. How much can a good, fulltime trader expect to make in a year. I have heard everything from 20-30% to thousands of percentages per year. I have been hundreds of myfxbook and forexfactory accounts trying to find out, and only thing I after that know for sure, is that most people just crash and burn.

What then would I hope to make? If I at some point could double my money per year, and yes, offcourse I understand that it would become harder and harder the bigger my account would grow, but in order to grow 10 000 dollars account to anywhere near to make up enough to live on, this is what it for me would need to be… And here comes the problem, the number I most often hear is around 50%. So, If that was true, I would make 50 000 with and 100 000 dollars account, and that 50 000 wouldn’t be quaranteed, I could even loose money, while most of the “normal jobs” pay that amount, without any risk.

What would then be needed to double my money? Lets say I could get 60/40 win loss ration, with 1:1 profit/loss ratio. If I made 10 trades per week ( Im currently daytrading ) and the average trade would make me 10 pips with 1% risk to my account. In month that would make 8% growth, and would more than double my account. I do understand that 60/40 win/loss ratio isn’t easy to get, but one would think that it wouldn’t be impossibly hard ?!? If one in hundred could make that, Im willing to try.

I Really would appriciate someones more experienced wiew on this, and is that 60/40 ration really THAT hard to get, that allmost no one seams to manage to do it? ( Atleast according to Myfxbook and forexfactory)

2

I understood that you are worried about the percentage or the amount of profit you would be making.
There is one more thing to keep in mind that a good trader can very well loose the entire money in one bad trade due to bad or worse risk management.
ROI shouldn’t be the primary concern but learning and making the investment safe is the first concern.
Never run behind the profit. If you know how to manage things well then profit will come to us.

1 Like
3

I was wondering the same thing when I started, and actually still am. When I started, I made around 60% ROI in my first year, so yeah… I was close to that 50% many have quoted you, and in my second year I made about the same, allthough I most likely would have made little better, if I didn’t have some personal problems during the last half of that year. And the reason I have now been away frome the market for few years, is allso the one you are afraid that will be your downfall.

I didn’t have enough money to invest in order to do Forex fulltime. I wasn’t allso ready to take responsibility from other peoples money, I had enough trouble trying to keep my emotions in check with just my own money. And when I compared the time it took to make that money, and the actual amount I was making, it just wasn’t worth it. Allmost all of my free time was spend trading. All that said, I have now started to trade again. Im back to demo account and finding out the thing I allready knew last time. In demo I can double my money in a year, in real life emotions get in the way. Now im putting all my efforts to getting my trading as unemotinal as possible. Im manually backtesting several hours a day, doing same thing untill I feel 99% confident on my succes. I know I can do it profitable, now I want to do well enough to become rich. I know that the 8% you are talking about per month is possible, I don’t know how many can actually do it. The leap from 60% ROI to 100% ROI might be huge, but Im going to give it a try.

4

Right.

There are two big and related reasons for that.

  1. People displaying their trading at myfxbook and FF are trying to attract others and have, at least to some extent, a marketing outlook rather than a trading outlook, and they know that profit attracts people, so some of them take risks that you shouldn’t take.

  2. People who crash and burn (and there are many) are people whose basic orientation for trading comes instinctively from a place of “how much profit can I make?” rather than from a place of “how should I manage my risk?”.

The second reason is possibly a bit like your question. Not that that invalidates your question, which is still a perfectly good one.

That makes good sense.

It’s asking a lot, to double an account over a year,

It’s asking to make an average of over 6% monthly, and compounded monthly.

I wonder what proportion of retail forex can do that? My guess is not one in 10,000.

That’s a good way to look at it, I think.

Understanding that there are drawdowns and that it’s very swingy, and that if you average out at that, you’ll surely have a few losing months a year.

What matters isn’t whether you can make 6% or 8% per month.

It’s whether you can do it with no risk of ever having a 40% drawdown, which will destroy your calculations.

Again, that’s why your basic orientation needs to be one of risk management rather than profit-making.

Compare these two traders.

Trader A has averaged 3% profit per month, over 2 years, and his worst month was breakeven and his best month was +6%.

Trader B has averaged 8% profit per month, over 2 years, and his worst month was -40% and his best month was +56%.

Which one do you want to back with your own money?

There are far more trader B’s around than trader A’s, but trader A is the one who can easily find investors.

That’s because investors understand risk management and prioritize it over profit potential.

It’s possible.

A few do it.

They have a lot of mathematical and statistical understanding about trading, and many, many years of experience.

But you have to START from a place of “learning all there is to know about risk management”.

2 Likes
5

Thanks to all who responded, it helped to clear the problem a bit. Seams I just have to try and see how far I can get, hope the price isn’t too great.