Hello. Traders.
If a trader makes more than 90% a year, is it big? normal? or small?
Pro financial institution traders managing index linked funds consistently make APR around 20%. You might consider that low, but that’s the reality.
However, Pro FX traders are in a better but riskier position to make more, albeit consistently around the 30% APR. With account balances of $500k, $150k is no small beer.
Understand that huge profits can be made - and lost - but being consistently profitable year in and year out is tough going for anyone.
How much do you risk per trade?
For open trades, whether it’s one or more, I keep strictly to a maximum daily open risk exposure of 5%. I learnt that after suffering 13 seperate losses of differing FX pairs on one day’s session. While unusual, to say the least, the market alligator is always ready to snatch up any laxity traders make.
No more than 2% risk personally.
Total exposure 6% across multiple trades and if your doing over 10% per month your a beast !!
Here’s one of the great logical mysteries of trading.
Let’s suppose that you only trade 10 times a month, that’s 120 trades per year: not many you’d have to say.
Let’s suppose only 55% of your trades are winners. That’s 66 winners per year: not many you’d have to say.
Let’s suppose you only risk 2% per trade as per many experts’ advice. But let’s suppose your r:r is only 1:1.5: not very high you’d have to say.
All experts will tell you this is a not very impressive strategy. But it returns 136% annually. So why aren’t we all doubling our money every year?
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Thank you for your reply.
If you have a strategy like that, please let me know.
For people investing in ETF’s such as the SPX500 for example, the average annual return is about 7-10%. Keeping in mind that’s an average over a long term period, like 15-20+ years. That sounds low, but with compounding and reinvesting your profits (and dividends if you’re holding stocks that pay dividends), it adds up to a pretty comfortable retirement.
Knowing that, IMO if you’re making more than 10% annually trading, you’re already ahead of the pack, so just keep on banking those 1% wins.
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