How much does a forex trader have to earn in order to be considered successful?
Hello! There is a lot of talk about the fact that a successful Forex trader should earn at least 100500% profit per month. Otherwise, he is a loser.
The other day, a poll was conducted in our VKontakte group about how much% of profit per month MINIMUM must be earned by a trader in order to be considered successful. The results (about them below) were very interesting. I propose to consider the size of the planned monthly profit, go down from heaven to earth and clarify the path to the treasured millions.
How to measure earnings?
First of all, I want to note one important detail. Earnings should not be measured in money (dollars, rubles, tenge, etc.), but as a percentage. Why? This is a more adequate assessment. Many newcomers come to Forex when they see an advertisement about “earning $ 100 a day without getting up off the couch”, while they don’t think about the fact that the initial deposit in the account can be 10, or maybe 1000 or even 10,000 dollars. And earning $ 100 with a deposit of $ 50 or $ 1,000 are very different things.
In the case of a penny depot, earning 100 bucks is essentially a casino and an all-in game. And if the deposit is, say, $ 1000, then the profit is $ 100, here it is closer to thoughtful work without hatred.
Still sometimes some try to understand: if their strategy brings 200 points of profit per month - is it a lot or a little? It is not much and not little. Because it all depends on the trading system. Some intraday traders catch 5 points per day, and traders on the daily charts calmly perceive profit / loss of 100 points. Forex gives us the flexibility to choose the position size, and accordingly you can earn 100 points with a lot of 0.1 or 10 points with a lot of 1.0. In monetary terms, the amount of profit will be the same.
So, I think we have decided that it is most correct to measure profit as a percentage. We move on.
What does the people want?
Returning to the survey mentioned at the beginning of the article. Here are his results at the time of this writing:
As we see, the majority still knows how to think more or less adequately and expects Forex income at the MMM level (in the last reincarnation, if my memory serves me, suckers were attracted by 20% per month).
The second most popular option is 5-10%. But do not forget that the question in the survey was about the MINIMUM yield per month. Those. we mean that there will be months with higher returns, but no less. The 5-10% option is realistic, it pleases that many understand this.
What surprised (though not really) was that almost 17% of respondents believe that without a profitability of 100% per month, there is nothing to do on Forex ....
People, do you really think that you will steadily double your deposit every month? Let's see what will happen with such a return (100%) with a deposit of $ 1000.
- 1 month - 1000 $
- 2 month - $ 2000
- 3 month - 4000 $
- 4 month - $ 8000
- 5 month - $ 16,000
- 6 month - 32000 $
- 7 month - $ 64,000
- 8 month - $ 128,000
- 9 month - $ 256,000
- 10 month - $ 512,000
- 11 month - $ 1,024,000
- 12 month - $ 2,048,000
- 13 month - $ 4,096,000
- 14 month - $ 8,192,000
- 15 month - $ 16,384,000
- 16 month - 32 768 000 $
- 17 month - $ 65 536 000
- 18 month - $ 131,072,000
- 19 month - 262 144 000 $
- 20 month - $ 524,288,000
- 21 months - 1 048 576 000 $
Have you already figured out what to spend BILLION dollars?
Small spool but expensive
So, we come to the main thing. What should be the profitability of a successful trader? But before, I cannot but touch upon the topic of 100% per month. Yes, you can do 100%. At the risk of losing the same 100%. There are such tactics, we have already considered them several times. For example here.
And if we talk about stable, manual trading, designed for serious work, then with a yield of 2-5% per month, in successful months up to 10%, you can already be considered a professional. The main thing is that it is stable and without major drawdowns.
“But I have a deposit of $ 500! What are 10% ??? I want a Ferrari in six months !!!!!! "- the standard reaction of a newcomer experiencing an acute attack of greed. I’ll tell you one secret - the market doesn’t give a damn what deposit you have there and that you need to pay a loan for a microwave in a week.
But how, then, to make money without having a large amount in the account?
The algorithm is very simple:
1. You learn to earn stably 2-5-10% without strong drawdowns, gain statistics on successful trading.
2. Open a PAMM account.
3. Repeatedly increase your income without increasing profitability as a percentage of your trade. Those. in fact, continue to do the same as in paragraph 1.
What do investors like?
Below you can see two graphs. Both graphs show the annual return of two different traders.
The red color indicates the profitability chart of an aggressive trader. He earned an impressive 300% over the year. The yellow graph shows the profitability chart of a conservative trader who follows money management, does not overstate lots, complies with all the rules and aims at stability, more than profitability. Its profitability is 50% per year.
Which trader will the investor choose with a hundred bucks in his pocket? In 90% of cases, an aggressive trader with a high profitability.
Which trader will an investor choose, say, with a million rubles? In 100% of cases - a stable trader, even if his profitability is lower.
Understand: big money loves a quiet haven. To a person with normal money, a jumping chart, albeit with a high yield, is seen as a clowning. As a rule, people with money calmly relate to small drawdowns, do not resent the commissions for the manager, and are generally adequate.
Who will invest in an aggressive trader? Basically, hysterics with a hundred bucks, which, at the slightest drawdown, panic. Do you need such investors?
“But profitability is still small !!! 11” - the newcomer thinks in despair. Calm down, exhale and pick up the calculator. Let's say your deposit is $ 1000. If you trade only with your own money, with a yield of 50% per annum, you will earn $ 500. Not much.
And now let's calculate what will happen with the same profitability, but with the attraction of investor funds. Suppose you collected $ 1 million in management (this is not difficult), earned the same 50% per annum. Those. in monetary terms, $ 500,000. Suppose you set a capital management fee of 30% of profits. Those. it is your earnings amounted to $ 150,000 per year. It’s not bad, considering that you risked the same thousand dollars of personal capital.
The saying “Better less, but better” works not only in life, but also in forex trading. Try to change the paradigm, set yourself the goal of trading in the first place steadily, and only in the second - highly profitable. And your affairs will go uphill.