What is the realistic profit goal from forex?

Discussion in 'Forex' started by jm73, Apr 19, 2006.

  1. jm73


    I have read somewhere that if somboday can make 20% of consistent annual prfot, it is considered outstanding.

    Is "20%" meaning 20% of your trading size or your acct size?

    If the 20% annaul profit of acct size is considered outstanding for spot forex, I think we are all wasting time here.

    I totally agree that 20% annaul profit of trading size (leveraged amount) is considered outstanding.
  2. Ebo


    You want the real answer?

    The odds are pretty good that you will blow through 50% of your capital in 2 months or less!
  3. jm73


    I know it happens a lot and it happens most of times when somebody trade with over leverage.

    If you have decent system and if you are trained properly, I think 10:1 leverage is more than enough to make way better than 20%.

    I am talking abour just retail level acct size less than 1mio.

    If you are talking about big acct size like 10mio or more, it is totatlly diferent stroy since the liquidity of market cannot support those big trading size with leverage.
  4. they are talking 20% of your account size. Warren Buffet has been averaging around 23% for a couple of decades.

    If you have a small account, you will make a much larger percentage if you are good. If you trade a $2,500 account and make $500 in one day, thats 20%. Thats a pretty good day and can easily be done in the e-minis.

    If you trade 10,000,000, you would have to make 2,000,000 a day for the same 20%. Thats a lot of risk. Or a ton of luck.

    The reality is that with a small account you will risk a large percentage of your money. There are reasons for that. It does not seem like that much money. Small accounts are usually in the hands of beginners and they don't know any better. One or two good trades makes them think they can do it every day.

    On the other hand, a large account is usually traded by someone that has spent years growing that account. They know you cannot risk a large amount every day or they will once again have a small account.

    As the account grows, the attitude changes from one of making lots of money, to protecting what I have earned and using good risk management to keep it and still earn more.
  5. jm73


    I totally agree with you.

    That's why I mentioned "I am talking about the retail level acct size".

    If I have 100K in my acct and the realistic goal is 20% of 100K, I wouldn't trade FX. I'd rather put 100K in mutual fund.
  6. Let's put it this way: if you are trading $100,000 with 10:1 leverage, would it surprise you to learn that you need to average less than 1 pip a day on any of the XXX/USD majors, to realize 20% annual returns? ($20,000 for the first year, $24,000 for the second year, etc.; ignoring taxes, if any, and without withdrawals or deposits.)

    Well, it's true. 0.77 pip a day, to be exact. This is taken from a spreadsheet I have, assuming only 48 weeks, or 240 trading days a year, with weekly compounding. (Go ahead, take those 4 weeks off... you've earned it.)

    If you can average 5 pips a day instead... just 100 pips a month... that translates into 227% a year.

    If you can average 10 pips a day instead... just 200 pips a month... that translates into 940% a year.

    You'd better sit down... or lie down... while you're visualizing your ever-so-bright future, your glorious destiny, in your mind's eye...

    The next logical question then might be: is at least 100 - 200 pips a month a realistic goal for a serious, passionate, dedicated trader with a $100K account, consistently over time? Absolutely, without a doubt. That, and much more. Now, what about the same earned pips, combined with 10:1 leverage all the time? Aah, that's a whole different ball game / skill level...
  7. RedDuke


    I agree with late apex.

    I saw many posts that if you can make 100% a year, you will be richer than Gates and Buffet in no time. What is forgotten a little thing called liquidity. Just because your system tells you to buy/sell 10,000 ES contracts, does not mean you can do it. Each instrument has its own limits.

    Yes it is possible to turn 100K into 200K or even more year after year. But try taking even 10 mil (small sum of money from institutional point of view) and try to do the same.

    100K into 200K in a year is possible, but very difficult.

  8. jm73


    I agree that turning 100K acct to 200K within a year is very difficult.

    But that depends on the system and skill level of trader, not the market itself.

    What's the difference btw trading 1mio size with 100K acct and with 1mio acct?

    The only advantage of having 1mio in acct is more cushion when trade goes against you.

    Well... if that's really big advantage, i have nothing to say.

    However, if your system can manage the risk properly, I see there is no difference and upto certain amount the liquidity wouldn't be matter.

    For spot forex, I would say "certain amount" would be btw 3mio~5mio.

    Many firms are advertising they can handle 10mio or 50 mio without an issue. but I don't think so.

    Please correct me if you feel I am missing something big here.

  9. RedDuke


    My search for someone who trades in 10mil clips is still going on. I would be very curious to talk to such person.
  10. You could be up over 100% in the last week if you were to trade the Oanda XAG/USD.
    #10     Apr 19, 2006