How much can we reasonably expect to make by trading on Forex?

[porph]

I'd totally agree with the last few comments. I think the worst possible thing is visualising the money when you trade. Suddenly you will become very afraid of closing losing trades and booking the loss as you start to compare the monetary value with a TV, a holiday, a car, a house..... (trying to remember who it was that lost about 300-400k trying to trade enough to buy a french chateau..)

I cannot emotionally detach myself from money so i need to detach money from trading.

 

[Magos]

While this is a somewhat viable option to make the profit, it doesn't compensate for exponential growth.

If you start with a $1,000 account, trade mini-lots, trade 20%, and average 50 pips a day the growth is a lot better. Afterall, if you have 100,000 in to trade, why only trade 1k or 2k when you can easily trade 15k?

Here is a simple formula I came up with to do the math. I'm sure I'm not the first, but I didn't find it anywhere on the internet when I tried a few google searches.

$1,000 X 1.1^X

This is assuming that you make trade 20 percent a day and make 50 pips on each day. After 60 days of trading you will have $304,481.64 and after 75 days you will have $1,271,895.37.

This is just how it could work. We all know how certain trading is though.

20% a day

I will give you all my money to invest even re-mortgage my house LoL

 

[t2wbrew]

The question how much can I make is fair.
It's just that the answer should be disconnected from monetary amounts.
The same question you would ask a fund manager should be fair to ask of traders:
How much does a careful trader increase his holdings on a % basis per year? What is a realistic % ROI to shoot for?
How many negative periods should be expected? Avg number of winning periods vs. losing?
Largest expected drawdown?
Minimum capital to achieve 99%+ confidence level of success with given variability? Several posts here that someone blew out their bankroll and are starting over. That tells me the people posting don't have a sense of variability and money management.

Basically, is there a winning game here, or is it, like counting a 6 deck blackjack table, pleasantly losing money at a semi-controlled rate.

 

[RedGreenBen]

The question how much can I make is fair.
It's just that the answer should be disconnected from monetary amounts.
The same question you would ask a fund manager should be fair to ask of traders:
How much does a careful trader increase his holdings on a % basis per year? What is a realistic % ROI to shoot for?

And all a fund manager would tell you is their past performance (which is no guarantee of future...). If 100 people replied to you giving you their honest % profit/loss per month then how would it help you?

You have no way of knowing where on this distribution you are likely to sit (because it won't be the average).

Paper-trade, back-test, trade small and then divide what you think you can make by pi.

Ben

 

[t2wbrew]

And all a fund manager would tell you is their past performance (which is no guarantee of future...). If 100 people replied to you giving you their honest % profit/loss per month then how would it help you?

Paper-trade, back-test, trade small and then divide what you think you can make by pi.

Ben

Understood, but the past performance gives some indicator of how steady a fund manager is and can be compared across bull and bear markets. The better funds managers publish their historical data to say: 1) this is serious ROI 2) we're reasonably consistent and 3) there are serious risks and drawdown periods. However, the serious guys only want to deal with seriously high net worth investors, as far as I can tell.

If 100 people here who consider themselves successful traders revealed some statistics of how they were really doing, it would give a fair indication of whether the trading is working or not. It would give a fair targets: I want to score in this range the first year, a little better after a year, I can justify X dollars for training to achieve that goal.

I have been back-testing, and frankly most of my back-testing so far says most technical approaches do not actually work very well, or my back testing is too simplistic.

And, yes, once I pick an approach, I figure if I make 30% of what is predicted, I'm doing good. I would prefer the 30% be on the positive side of 0.

When people say they aren't in it for the money, I don't understand that. I would understand if we were talking about working for the Salvation Army. When I volunteer for my church, I'm not in it for the money. When I place bets at the table, I'm in it for the money.

 

[RedGreenBen]

Understood, but the past performance gives some indicator of how steady a fund manager is and can be compared across bull and bear markets.

If 100 people here who consider themselves successful traders revealed some statistics of how they were really doing, it would give a fair indication of whether the trading is working or not.

When people say they aren't in it for the money, I don't understand that.

Lots of good points and I am only partly disagreeing with them in the interests of healthy discussion!

1. I agree that past performance gives you some useful info. The problem is that here you can have no confidence in the credibility of the source (sorry guys/gal!) and no way of forecasting how your own aptitude/learning curve relates to theirs.

2. I think, for me at least, the point about not being in it for the money is that the money is just a great way of 'keeping score'. That is one of the key reasons why I love trading, you have nowhere to hide, your profit/loss is a very honest 'manager appraisal'! Usefully though, if you take this approach then you are more likely to succeed then if you are driven by making vast sums of money.

btw, for all the reasons discussed throughout this thread, I would never write here that after a year or 2 you would be doing well to be making 5+%/month!

 

[t2wbrew]

My goal is to find a strategy that makes at least 20% per year net. If I can't do that well, then why put all these hours into it, for $40 per year I get a pretty good buy and hold newletter that should do almost that well. I expect 55-60% win ration, which with a money mgmt plan should yield 3% on the good months to offset 1-2% drawdown on bad months. The 20% should hold whether bull or bear market and function as a hedge on buy and hold bear years. The 20% should be net of fees and training costs.

I get nervous when I see strategies that show serious losses for greater than 5 periods in a row; I really don't think I can handle that emotionally. This is why the most successful trend traders modified the original strategy to give investors a more modest return with a risk level people could live with.

If I invest 30 units in a strategy, I want it to return 6+ units per year, though I'm not unhappy with 4 units. less than that and why am I bothering? That's net.

Are you guys getting 6 units return per 30 units bankroll per year? I think it's a fair question and fair expectation if I'm to put in the work to master a set of strategies.

I spent a lot of hours in blackjack tables working a .5% edge, and in the end I decided, this is silly going head to head to make 200 plays an hour to keep one average bet per hour. I ended my blackjack time up a whole $50 after training costs. I don't want to make the same mistake with trading.

 

[Christiaan]

260 %

Hi everyone. I know that's a very general question to ask but I'm new to this. I want to know how viable trading on Forex is likely to be, assuming I'm reasonably good at it. Thanks!...E

I have heard of people making 260 %.:thumbsup

 

[Christiaan]

When people say they aren't in it for the money, I don't understand that. I would understand if we were talking about working for the Salvation Army. When I volunteer for my church, I'm not in it for the money. When I place bets at the table, I'm in it for the money.[/QUOTE]

It is all about the money but I think that people will trade anyway even if they win the lotto.

 

[Mr.J-Arthur]

Expect $0-($-10,000) first 1-3 years. This is tuition and almost unavoidable. You are lucky to show consistent profit IF you do. Most start out with huge goals taking huge risk *tisk tisk*

Once you learn, if you still have the shirt on your back...it can vary A LOT (depending on style and amount of capital). $50-$50,000...There is never a limit on what you can make, or lose.

 

[t2wbrew]

I'd rather take a route with a lower tuition cost then.
I lost about 3% of capital in my first 3 months of swing trading ETFs and stocks, mostly due to one boneheaded premature crude oil play, but I have made reasonably consistent profits the last 2 months so I am almost back to even. Swing trading and passing on many more potential setups than I accept to only take high probability trades works for me and I can sleep at night.

Learning how to take a modest amount of risk on simple ETF strategies is challenging me enough without getting into day trading and forex. Plus I have a day job.

My tuition cost for trusting everything to mutual funds and being asleep at the wheel was 35%.

 

[klastica]

I'd rather take a route with a lower tuition cost then.
I lost about 3% of capital in my first 3 months of swing trading ETFs and stocks, mostly due to one boneheaded premature crude oil play, but I have made reasonably consistent profits the last 2 months so I am almost back to even. Swing trading and passing on many more potential setups than I accept to only take high probability trades works for me and I can sleep at night.

Learning how to take a modest amount of risk on simple ETF strategies is challenging me enough without getting into day trading and forex. Plus I have a day job.

My tuition cost for trusting everything to mutual funds and being asleep at the wheel was 35%.

What is ETF?

 

[Donkers]

Exchange Traded Fund - you buy and sell them like share. No stamp to pay I think. The tend to track things like the FTSE (eg isf), gold, etc and you can even buy Short ETFs that go up when so,mething else goes down.

 

[anley]

If you trade with 100:1 leverage then the chances of you going broke are almost perfect, even if you're goood. The reason is simple, you just have to be unlucky once, or mess up once and the leverage will get ya.

Even 50:1 is far too high.

Make it 20:1 or even better 5:1 and you've probably got a good chance (assuming you know what you're doing) of making and KEEPING the money.

Anyone can make it, but not many people can keep it over a long period o time.........

To Sum Up - At 100:1 your brokers are giving you plenty of rope to hang yourself and guess who your money will be subtly transferred to........That is the name of their game so be careful if you play by their rules.

Good luck anyway

 

[AlexisD]

5 ticks a day/lot ON AVERAGE will make you rich in the long term. It is both achievable and challenging.

 

[Citizen2007]

The funny thing about trading is that we all do it so we can make lots of money, fulfill all our wants and desires. The real truth is that we dont begin to earn money from trading until we put the money aspect aside and accept life without all these desires.

This simple shift in thinking eliminates a lot of deeply embedded emotions that we are not aware of and which contradict the right mindset required to focus on just the process, and not care about the rewards. It is indeed a very difficult thing to do, but a necessity in order to succeed in this environment.

For this reason , the question - How much can we expect to make trading forex , immediately places the minds focus on great wealth that is envisioned by many. It is only natural for one to think about, or have a quiet longing for, the huge amounts on offer, but this sets them on the losing track from the very beginning.

A better approach maybe to understand what can be attained but to decide on a wage amount and HOW that can be achieved. The HOW allows you to remain focused on a process that aims to achieve a set figure that will not waver your emotions and throw you towards indecision as your account balance fluctuates to a higher level on each tick.

 

[Black Swan]

The funny thing about trading is that we all do it so we can make lots of money, fulfill all our wants and desires. The real truth is that we dont begin to earn money from trading until we put the money aspect aside and accept life without all these desires.

This simple shift in thinking eliminates a lot of deeply embedded emotions that we are not aware of and which contradict the right mindset required to focus on just the process, and not care about the rewards. It is indeed a very difficult thing to do, but a necessity in order to succeed in this environment.

For this reason , the question - How much can we expect to make trading forex , immediately places the minds focus on great wealth that is envisioned by many. It is only natural for one to think about, or have a quiet longing for, the huge amounts on offer, but this sets them on the losing track from the very beginning.

A better approach maybe to understand what can be attained but to decide on a wage amount and HOW that can be achieved. The HOW allows you to remain focused on a process that aims to achieve a set figure that will not waver your emotions and throw you towards indecision as your account balance fluctuates to a higher level on each tick.

top post

 

[london88]

A better approach maybe to understand what can be attained but to decide on a wage amount and HOW that can be achieved. The HOW allows you to remain focused on a process that aims to achieve a set figure that will not waver your emotions and throw you towards indecision as your account balance fluctuates to a higher level on each tick.

Reads like the opening chapter of a successful book. Shoud I contact a publisher on your behalf?

 

[jak672]

If you're not in it for the money, then why bother? Sure, trading the markets is a great rush and certainly beats playing solitaire, but if you trade based on a need for fun then you're destined to lose imo. Thats not to say you can't enjoy trading, but making money should always be a trader's #1 priority.

 

[Clive Forsythe]

Hi there, I too have seen the mailer, did you ever get any replies and if so what did they say?

Cheers