It seems that every currency trader makes many trades each day and expects to become a millionaire.
Let’s say you start off with $1000 and make a “measly” 1% per trading day. At 5 trading days per week, that’s 5.1% per week. At 52 weeks per year, you multiply your money by a factor of 13.29 each year, which means that you turn $1000 into $13,290 after just one year. After 5 years, you have multiplied your money by 415 thousand, and you now have $415 million. After 10 years, you have multiplied your money by 172 billion, and you now have $172 trillion. After 40 years, you have multiplied your money by 8.73*10^44.
So why haven’t ANY currency traders taken over the universe, galaxy, or even solar system yet?
Let’s say you start off with $1000 and make a more conservative 1% per week. At 52 weeks per year, your return is 67.77% per year, which leaves Warren Buffett an average of about 25 percentage points in the dust compared to you. You multiply your money by a factor of 177 after 10 years, 31.2 thousand after 20 years, and 974 million after 40 years. So 40 years of currency trading would make you worth $974 billion. Even James Bond villains would look poor to you.
So why haven’t any currency traders even taken over the world yet?
I’ve read John Train’s profiles of George Soros and Michael Steinhardt. Merely reading about how they work exhausts me. Now why are these two individuals so famous? If such wild trading success were that attainable, wouldn’t there be more traders just as successful, and wouldn’t Soros and Steinhardt be not so noteworthy? Just how many financial market traders are represented in the Forbes 400?
If I double my money in 3 years, I’d consider that to be the miracle of a lifetime. According to the rule of 72, that would be an average annual return of 24%. 24%/year would put me in the company of Warren Buffett. 24%/year for 40 years would multiply my money by a factor of 5456. This would turn $1000 into $5.456 million or $10,000 into $54.56 million.