So - let's imagine you had £100,000 to invest in something. What would be a good, realistic annual return on investment for you?
Would you be happy with a 20% return on your money?
These days, I think most people would be ecstatic to see a 20% return. In many circles, that would be seen as excellent.
So - in this example a 20% return would be £20,000 on your original £100,000.
But to get that £20,000 for the year, two things are required:
First, there's the substantial original investment of £100,000. And second, there's the excellent return of 20% a year.
I don't know how often you check your pension account and the returns on your investment funds...
But for the majority of us, we'd be hard pushed to find many funds making 20% a year.
To be honest, if you see a 5% return you'd probably be happy.
Now, I know that forex trading is different to longer term investing...
And of course, forex is far more speculative...
But having said that - what makes people think they can make returns of 1,000% a year in forex?
It sounds crazy, but some people really think that's what they'll make from trading.
For example, some people put £1,000 into their trading account and then expect to make £1,000 a month in profit.
That would be a 100% return on their money every single month...
And if they expect that to continue for the whole year, what they're really hoping for is a 1,200% return on their money.
Now, you don't need me to point out how ambitious that hope really is...
Even George Soros and Warren Buffett would be jealous of those returns.
You see, the best money-managers in the world would be happy with 'just' a 20% return on their money.
And if that's the case, then 20% a year is probably a pretty good target for you to aim for...
Although to be honest, even breaking even can be a good result for beginners.
So if you're serious about learning how to trade, please do yourself a favour...
Take a reality check.
Don't start out expecting 1,200% a year returns on your money.
You'll get a lot further if you keep things in the realms of reality and possibility.
If you have £10,000 as your trading bank, you should be happy if you make £2,000 in profit throughout a year's trading.
Richard Hill
Editor