Forex earning

Net profit is $2,150 - $500 = $1, 650 if using a commission broker (win rate would be like be higher though) to account for slippage in the calculation of your potential profit, reduce the net profit by 10% (this is a high estimate for slippage, assuming you avoid holding through major economic data releases).

No deposit forex bonuses

How Much Money Can I Make Forex Day Trading, forex earning.

This would reduce the net profit potential generated by your $5,000 trading capital to $1,485 per month.

How much money can I make forex day trading?

Julie bang @ the balance 2021

Many people like trading foreign currencies on the foreign exchange (forex) market because it requires the least amount of capital to start day trading. Forex trades 24 hours a day during the week and offers a lot of profit potential due to the leverage provided by forex brokers. forex trading can be extremely volatile and an inexperienced trader can lose substantial sums.

The following scenario shows the potential, using a risk-controlled forex day trading strategy.

Forex day trading risk management

Every successful forex day trader manages their risk; it is one of, if not the most, crucial elements of ongoing profitability.

To start, you must keep your risk on each trade very small, and 1% or less is typical. this means if you have a $3,000 account, you shouldn't lose more than $30 on a single trade. That may seem small, but losses do add up, and even a good day-trading strategy will see strings of losses. Risk is managed using a stop-loss order, which will be discussed in the scenario sections below.

Forex day trading strategy

While a strategy can potentially have many components and can be analyzed for profitability in various ways, a strategy is often ranked based on its win-rate and risk/reward ratio.

Win rate

Your win rate represents the number of trades you win out a given total number of trades. Say you win 55 out of 100 trades, your win rate is 55 percent. While it isn't required, having a win rate above 50 percent is ideal for most day traders, and 55 percent is acceptable and attainable.

Risk/reward

Risk/reward signifies how much capital is being risked to attain a certain profit. If a trader loses 10 pips on losing trades but makes 15 on winning trades, she is making more on the winners than she's losing on losers. This means that even if the trader only wins 50% of her trades, she will be profitable. Therefore, making more on winning trades is also a strategic component for which many forex day traders strive.

A higher win rate for trades means more flexibility with your risk/reward, and a high risk/reward means your win rate can be lower and you'd still be profitable.

Hypothetical scenario

Assume a trader has $5,000 in capital funds, and they have a decent win rate of 55% on their trades. They risk only 1% of their capital or $50 per trade. This is accomplished by using a stop-loss order. For this scenario, a stop-loss order is placed 5 pips away from the trade entry price, and a target is placed 8 pips away.

This means that the potential reward for each trade is 1.6 times greater than the risk (8 pips divided by 5 pips). Remember, you want winners to be bigger than losers.

While trading a forex pair for two hours during an active time of day it's usually possible to make about five round turn trades (round turn includes entry and exit) using the above parameters. If there are 20 trading days in a month, the trader is making 100 trades, on average, in a month.

Trading leverage

In the U.S., forex brokers provide leverage up to 50:1 on major currency pairs. for this example, assume the trader is using 30:1 leverage, as usually that is more than enough leverage for forex day traders. Since the trader has $5,000, and leverage is 30:1, the trader is able to take positions worth up to $150,000. Risk is still based on the original $5,000; this keeps the risk limited to a small portion of the deposited capital.

Forex brokers often don't charge a commission, but rather increase the spread between the bid and ask, thus making it more difficult to day trade profitably. ECN brokers offer a very small spread, making it easier to trade profitably, but they typically charge about $2.50 for every $100,000 traded ($5 round turn).

Trading currency pairs

If you're day trading a currency pair like the USD/CAD, you can risk $50 on each trade, and each pip of movement is worth $10 with a standard lot (100,000 units worth of currency). therefore you can take a position of one standard lot with a 5-pip stop-loss order, which will keep the risk of loss to $50 on the trade. That also means a winning trade is worth $80 (8 pips x $10).

This estimate can show how much a forex day trader could make in a month by executing 100 trades:

Gross profit is $4,400 - $2,250 = $2,150 if no commissions (win rate would likely be lower though)

Net profit is $2,150 - $500 = $1, 650 if using a commission broker (win rate would be like be higher though)

Assuming a net profit of $1,650, the return on the account for the month is 33 percent ($1,650 divided by $5,000). This may seem very high, and it is a very good return. See refinements below to see how this return may be affected.

Slippage larger than expected loss

It won't always be possible to find five good day trades each day, especially when the market is moving very slowly for extended periods.

Slippage is an inevitable part of trading. It results in a larger loss than expected, even when using a stop-loss order. It's common in very fast-moving markets.

To account for slippage in the calculation of your potential profit, reduce the net profit by 10% (this is a high estimate for slippage, assuming you avoid holding through major economic data releases). This would reduce the net profit potential generated by your $5,000 trading capital to $1,485 per month.

You can adjust the scenario above based on your typical stop loss and target, capital, slippage, win rate, position size, and commission parameters.

The final word

This simple risk-controlled strategy indicates that with a 55% win rate, and making more on winners than you lose on losing trades, it's possible to attain returns north of 20% per month with forex day trading. Most traders shouldn't expect to make this much; while it sounds simple, in reality, it's more difficult.

Even so, with a decent win rate and risk/reward ratio, a dedicated forex day trader with a decent strategy can make between 5% and 15% a month thanks to leverage. Also remember, you don't need much capital to get started; $500 to $1,000 is usually enough.

The balance does not provide tax, investment, or financial services and advice. The information is being presented without consideration of the investment objectives, risk tolerance or financial circumstances of any specific investor and might not be suitable for all investors. Past performance is not indicative of future results. Investing involves risk including the possible loss of principal.

Forex trading information

Forex — the foreign exchange (currency or FOREX, or FX) market is the biggest and the most liquid financial market in the world. It boasts a daily volume of more than $6.6 trillion . Trading in this market involves buying and selling world currencies, taking profit from the exchange rates difference. FX trading can yield high profits but is also a very risky endeavor.

Getting into forex trading is easy:

1. Start with our free forex course.
2. Open an account with a broker.
3. Learn from other traders at the forum.

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Here I was able to quickly adapt and even figured out MT5, which for a long time seemed to me to be something incredibly difficult.

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Realistic forex income goals for trading

What are realistic and acceptable forex income goals?

Setting realistic trading revenue goals is a tough question to answer because there are so many factors. Each trader is different, and the reality is that most traders lose money. The reason is that trading is tough and it takes real effort and discipline to be successful.

It is impossible to find out what the best independent traders make. Only a few people share that information. Those who do, may or may not be telling the truth. We will start by looking at some independent forex trader salary public data available on the internet:

We will start by looking at some independent forex trader salary public data available on the internet:

Salary.Com says:
how much does a foreign exchange trader III make? The median annual foreign exchange trader III salary is $166,461, as of march 31, 2017. The range is usually between $130,000-$194,728. However, this can vary widely depending on a variety of factors. Our team of certified compensation professionals analyzed survey data collected from thousands of HR departments at companies of all sizes and industries to present this range of annual salaries for people with the job title foreign exchange trader III in the united states.

This professional forex trader income makes, not the retail traders who work from home.

A foreign exchange trader job is hard to find. But you can do it if you work at it, however, I think it is better if we work on trading for ourselves. Here is everything you need to know about brokers.

How much can you make trading the forex market?

There is no limit on how much you can make! You can make millions of dollars. Anything is possible which is why so many people try to learn how to trade.

WAIT! Forex income is challenging:

Before you get crazy here and start throwing loads of cash into a trading account. I need to tell you that, only a few people get rich trading retail forex. It is difficult, and you must be a master of trading and discipline to make a significant amount of money.

We could play the scenario’s all day long. This is the reason a lot of people get into forex trading in the first place. They see the possibilities of millions of dollars as what is possible. The next thing you know, they will have lost several thousand dollars trading. This is because they trade without knowing what they are doing and lack of discipline.

Realistic trading income calculations:

So let's calculate realistic numbers regarding profit potential.

The first thing you have to realize is that the use of leverage in trading is an excellent way to maximize gains. And risk can be managed fairly well if you have the discipline. That is the problem though is most people do not have the discipline.

But for the sake of this article, I am going to assume you have the trading discipline and have the ability to follow a forex trading income; risk management plan.

The great thing is you do not have to risk much to make a substantial profit. Let me give you an example.

You have an account of 10k, and you want to earn 2.5% per month with a goal of 30% account growth per year.

Now you decide that you are only going to risk 1% of that account per trade.

At 1% risk of 10k, that is $100 USD, and therefore you are only risking 1% at any given time, and you could potentially earn the 30% growth by never risking more than $100 at one time.

Now there are many more numbers that must be calculated such as what is your win rate, what is the risk to reward ratio. So the scenarios could go on and on forever.
You could, in fact, raise your risk to 2.5% or $250 and hit your goal with a single trade and meet our monthly goal by using a risk/reward ratio of 1:1.

Forex income compared to real estate income

Compare that with something real estate where someone might have to risk a great deal more to achieve the 2.5% gain. For example, you could spend 100k or more purchasing a house, and in trading, you can earn 2.5% with a much smaller investment by opening an account for as little as 1000. You can also read the information on gold investments.

You could potentially make 2.5% on one trade versus a lot more upfront money and time involved in real estate investment.

That’s the only trade you would have to make that month in order to gain what you would be averaging in real estate to be considered extremely profitable. The conclusion is simple: forex has such an incredible potential, that it can easily surpass real estate even with minimal risk measures in place.

I cannot think of many investments that yield anywhere near 100% ROI a year. Let's take a look and see how hard it would be to make this with minimal to moderate risk management. It comes out to 6% a month compounding. Now that, my friend, is more than doable in this market. If you are confident in your profitability as a trader and willing to risk, say 3% of your account on each trade, then with an RR of 1:2 you could easily achieve this percentage with one trade in a month.

Forex is an excellent investment IF you take it slow and focus on the long term. Also, read a million USD forex strategy.

What is the average forex trader salary?

I would like to compare forex vs average and above average careers.

Now, looking at the average income per capita (person) in the U.S. The average income per capita in 2015 was $58,714 via wikipedia.
Let us imagine that you would like to make at least $50,000 a year trading. After all, you're doing this for the money, so you want to make as much as possible.
Once again using minimal-moderate risk, we said you could accumulate 8% a month.

Assuming that you increase your lot sizes with your account each month, instead of weekly or daily for risk management purposes. You would need to have a $40,000 account to make $53,265.56 a year at 8% a month.

Now let's say you minimized your expenses and worked a job, so you were able to build your trading account. How long would it take you to make 1 million off of a $10,000 account at 10% ROI a month? In 4 years you would have $970,000. Divide that by 4, and you get $242,500. Which means that you made $242,500 annually. That is if you did not pull any out, instead let your account build at 10% ROI each month.

What if you wanted to wait until five years and then start pulling out all of your profits. In 5 years you would have $3,044,816. Now you can feel free to pull out all of the profits each month. That would mean you would make $304,481 a month! Just imagine that. If you build up your 10k account for five years, you will be making $3,653,779 a year after that if you pull out all of your earnings. So we see that it is much better to build up your account until you feel you NEED to take the money out. I mean, can you imagine making that kind of an income five years from now every month. I am not even talking about something that is unachievable. 10% a month is possible in forex by finding a great trading system, having proper discipline and finding a trading mentor. It's important to keep yourself in check, perfecting your craft each and every day by educating yourself.

In fact, 10% per month can be accomplished with only a few high-quality trades each month. Many traders get caught up in quantity instead of the quality of trades. We have a forex trading income calculator on this site to help you do your calculations.

I would challenge you to find another career in the world that will have you earning that kind of money in 5 years. I mean, honestly, those numbers are mind-blowing, remember though don’t get caught up in the figures. Trading isn't easy but can be done, if you follow a plan.

I say this simply to reinforce how profitable the forex market can be if you work hard, and have long-term goals in mind.

You really can make great income in forex

In conclusion, if we can maintain a realistic view of forex, then we have a greater chance of setting reasonable goals. This helps us maintain a profitable trading strategy that brings us a steady forex income over time. If you don't believe me take a look at the forex compounding calculator which will tell you all you need to know about how much forex income you can make.

"nothing can stop the man with the right mental attitude from achieving his goal. Nothing on earth can help the man with the wrong mental attitude." -thomas jefferson

Please leave a comment below if you have any questions about realistic forex income!

Also, please give this strategy a 5 star if you enjoyed it!

(33 votes, average: 4.45 out of 5)
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How much do forex traders make per month?

How much do forex traders make per month? What is the monthly earnings potential of the average forex trader? If you’re reading this article, you’re probably fairly new to forex trading, so I don’t want to misguide you.

In fact, I’m going to tell you some hard truths that you probably don’t want to hear, but they are absolutely necessary to learn if you ever want to become a successful forex trader. Your initial reaction may be discouragement, but there is a light at the end of the tunnel.

Please fight the urge to roll your eyes and move on to something more uplifting. Sometimes the truth hurts, but I will absolutely guarantee that if you don’t listen to what I’m about to tell you, you will NEVER be a successful, long-term forex trader.

So how much do forex traders really make per month?

This question is a little misleading for a couple of reasons:

Most forex traders are not profitable

No profitable trader in any market makes the same percentage of profit each month

These are the questions you NEED to ask:

Why are most forex traders unprofitable?

Despite what you may have heard about how easy it is to make money in the forex market, the truth is that most traders fail. It is also true that you will probably fail at trading, but you don’t have to. The real reason traders fail is probably not what you think.

This is why traders actually fail:

Greed

Most new forex traders have unrealistic profit expectations. They think it will be possible to make 25% – 50% or more month to month. They have dreams of turning their small account into a very large account in just a few years.

This is totally unrealistic. If it were possible we would all be doing it. Most successful traders make a much lower average monthly profit (3%-7% is common). If you’ve averaged 10% or better for more than a year, you’re a rockstar in the trading world.

Take this into consideration:

If you could sustain a 10% average monthly gain, you would more than triple your account every year.

By averaging 6%, you would more than double your account every year.

Starting with $5,000, and averaging only 3% per month, your account would grow to over $170,000 in 10 years.

Warren buffet became a billionaire trader averaging only 30% per YEAR!

I’m not saying it’s impossible to make 25% or more in a month. I’ve done it, and many others have done it. I’m saying its impossible to MAINTAIN such a high average monthly gain. In order to shoot for such a high goal, you will be pressured to take bad trades, overtrade, and overleverage (which brings me to my next point).

Overleveraging

Poor money management is one of the worst account killers for new traders. This goes back to greed, because traders typically overleverage while shooting for unrealistic profit targets.

You should be risking a small percentage of your account on each trade, and you should be risking the same amount on each trade. I recommend never risking more than 2% per trade. Many successful forex traders risk 1% or less per trade, and some very successful and experienced traders risk 3%.

Risking more than a small amount per trade is a death sentence for your trading account because all trading systems go through periods of drawdown. If you’re risking too much during one of these periods, you will, at least, wipe out much of your progress, if not completely wipe out your account.

Consider these two examples:

If you lost 10 consecutive trades, risking 2% per trade, your account would be down about 18%. You would need to earn about 22% of the remaining account just to get back to your starting balance.

If you lost 10 consecutive trades, risking 10% per trade, your account would be down by more than 65%. You would need to earn nearly triple the remaining account (187%) just to get back to your starting balance.

Not only does responsible money management help preserve your capital during losing streaks, it also helps to keep you trading your edge mechanically. That’s because losing 1% or 2% on a trade does not sting nearly as much as losing 5%, 10%, etc….

It’s easier to deal with the losses, psychologically speaking. You’re more likely to pull the trigger on the next trade, and let your edge work itself out over time. And that’s exactly what you need to do, if you know you have a profitable trading method working for you.

Insufficient testing

I cannot stress this point enough. Testing is the backbone of a successful trading program. Most new traders are too impatient and undisciplined to thoroughly test new strategies. I think this, again, goes back to greed, because we all want to fire our bosses as soon as possible. You want to get that account snowballing quickly, but this is a costly, rookie mistake.

The problem is that, without sufficient testing of your trading system or any new trading setup, you’re not going to know how it will hold up during changing market conditions. You need to know if your trading system can stay profitable through increasing/decreasing volatility, growing/shrinking average daily range, impactful news events, etc….

I would not even consider a new trading strategy unless it had proven itself to be profitable after, at least, a couple hundred backtesting trades – either through my trading platform or using a backtesting software, such as forex tester 3.

Next, I would forward test (with a demo or micro account) the new strategy for, at least, a few months. The more time you spend doing this the better off you will be down the road because you will have absolute confidence in a system that has proven to be profitable over time.

Knowing exactly what your system is capable of, and proving to yourself that your trading system is profitable over months or (preferably) years worth of different market conditions will go a long way in helping you to mechanically trade the edge that your system gives you – even when you’re experiencing a losing streak.

Discipline is the Bridge between Goals and Accomplisment

Lack of discipline

I’ve mentioned discipline a few times already, and it’s an import factor in profitable trading. It’s another psychological aspect of trading that can either make you or break you. Most new traders lack discipline in every aspect of their trading, from testing to execution.

It takes discipline, as well as patience, to properly test a new trading strategy. Most traders don’t have the discipline to do any manual backtesting at all. They simply learn a new trading method, and demo trade it for a week or two, or worse, they go straight to live trading.

It takes discipline to keep trading when you’re losing. If you’ve done your due diligence, then you already know for sure that you’re trading a consistently profitable trading system. With discipline, you will be able to keep pulling the trigger on the next trade and let your edge play out over time.

Sometimes you just have a bad feeling about a trade, although it meets your criteria. It takes discipline to mechanically trade every setup that comes along, but it’s a must. As soon as you start trading subjectively, you’ve abandoned your edge and you’re gambling.

Note: there is limited room for some subjectivity in some aspects of trading when you become much more experienced, but you should strive to trade as mechanically as possible even then.

Lack of discipline can also lead you into catastrophic behaviors, such as overleveraging (which I mentioned above) and revenge trading. Revenge trading is when you re-enter the market because you’re trying to earn back money that you’ve just lost – not because your trading system has provided another quality entry trigger.

Overtrading could be mentioned in the same breath. Successful, disciplined traders trade less, because they only take the best trade setups. They have the discipline to wait for the market and their trading system(s) to provide them with quality setups, rather than trying to force bad setups to meet some unrealistic profit target.

System hopping

If you’re a new forex trader, it’s absolutely necessary to find a consistently profitable trading system to start testing. As of right now, there are three profitable trading systems reviewed on this website that I have personally traded and recommend. However, I mostly use day trading forex live now.

Note: read my full reviews of these trading systems to see which one will fit your trading style and schedule, as each of these systems are completely different.

If you’ve been trading for a year or two, the truth is that you’ve probably already traded a few profitable trading systems. You just were not confident enough in them, or disciplined enough to let their edge play out over time.

You probably didn’t test long enough, started trading your hard earned money, lost a bunch of it, blamed the trading system you were using, and moved on to the next system. This is a constant, destructive cycle that a large majority of unsuccessful traders are trapped in.

There is no “holy grail” in trading. The point is to find a system that makes sense to you, and test it to see if it actually works. Just as importantly, you need to test it to prove to yourself that it will be profitable in the long term.

You’re looking for something that will provide you a verified edge in the market. You need to have an unwavering belief in the trading system that you are using. Once you do, you simply have to continue to trade the edge that your system provides for you with discipline.

Many traders unwittingly give up on profitable trading systems because they don’t trade them long enough, or with enough discipline, to let the edge work out for them. Even the best traders in the world lose lots of trades, but they have the discipline to let their edge play out.

Realistic Forex Monthly Earnings Potential

What is a realistic average monthly profit expectation for a successful trader?

This question is more in line with the way you should be thinking, although its answer may be just as discouraging: it depends on the trader, their trading system, the market, etc….

Successful traders simply trade the edge that their trading system(s) give them, and take what they can get. They don’t set goals and they don’t force trades to meet those goals.

A really good year for a successful trader might look like this:

January +5%
february -2%
march +9%
april +12%
may +3%
june +9%
july +15%
august +20%
september +7%
october -4%
november +5%
december +5%

A trader with this record, if no money was withdrawn from the account along the way, would have earned over 120% – more than doubling their starting balance! Their average monthly profit percentage would be 7%.

Even as I’m writing this I can picture the amateur traders saying to themselves, “that’s not enough! I’ll never be able to do this for a living at that rate.” that is greed and impatience doing what they do to every inexperienced trader.

You could make more than what is depicted in the example above, but if you don’t change your attitude and expectations, you will most likely make much less. Instead of asking yourself, “how much can I make per month as a forex trader?” you should be asking yourself, “am I willing to do what it takes to become a successful forex trader?”

Are you still looking for a profitable trading system? I recently changed my main trading system after testing a new one for over a year. Come see why I switched to day trading forex live.

Developing a profitable trading mindset

How to deal with consecutive trading losses

Dealing with the psychological highs and lows of trading

16 comments

Hi there,
I just want to thank you for taking your time to educate us newbie (& losing) traders.

I enjoyed your ebook “how to choose better support and resistance levels“.
I like your site, (not that its particularly important, but the font you use in your articles and site are very nice. I look forward to wading through your articles, and give your recommended trading systems a try out.

Thanks for the kind words, J! I’m glad you enjoyed the ebook. Let me know if you have any questions.

I’m new to forex trading & was thinking of start live trading with $500.
I will add $50 to my account every month.
Target monthly return 6 %

Thanks for commenting! Are you using a profitable trading system? If you’ve got a good trading system, targeting an average of 6% per month is certainly realistic – especially if you’re risking 2% per trade.

Since you’re just starting out, I wouldn’t recommend 2% per trade, though. You should risk the smallest amount that your broker will allow, and slowly build up your risk once you prove that you’re profitable.

Some people would tell you to demo trade first, which is actually not a bad idea. However, I find that you gain more realistic experience risking real money – even if it’s a small amount. It’s just different psychologically.

Your plan sounds good to me. Just make sure you’ve got a good trading system, and follow the rules faithfully. Good luck!

Hi thank you for your article

No problem. Thanks for reading.

Hi chris
thank you for the helpful article.
But I’m a little bit confused about the realistic monthly returnees, if I could average 6% monthly (from the comment above) and it’s certainly realistic, as you replied, isn’t this more than 50% annual average returnes? I thought this is impossible, specially doing it constantly!

Could you please clarify, thank you.

Thanks for reading. I never said making 50% annually is impossible. I know for a fact that it’s possible.

Hi chris hope you can help me on this one , have you aver seen traders who actually trade using a 1:1 risk reward ratio .. Of course witha hit rate above 50% .. And well in the en d they are actually profitable ?? Or succesful traders always use a higher risk to reward ratio?

Sure. That’s essentially what scalpers do. I know some scalpers are successful, although I haven’t personally met or spoken to any.

In my experience, it’s best to shoot for the highest reward to risk ratio that you can consistently achieve with your trading system. In DTFL, we target 2:1 reward to risk, although we sometimes close trades early for various reasons.

I’ve successfully traded other systems where the reward is targetted dynamically. If you can make a static 1:1 work for you, go for it. I haven’t been able to.

How is it going?Happy new year in advance.Wish you a prosperous and fruitful year ahead!Have you heard of compound interest where monthly return is being accumulated over time?Well,here is my anticipation for the new year 2018.

Starting with an account balance of $500,30% monthly return.That will be 500 x 1.3^12 = $11,649. Is it achievable?

Hope you will suggest good tips or advice.Stay healthy and happy trading! Cheers !

Sorry for the late response and thanks for the kind words. It’s been busy over here due to the holidays.

I’ve heard of compounding returns, of course. That’s the goal of most traders. However, shooting for 30% per month is unrealistic, IMO.

Most new traders would be lucky to make 30% per year and keep it. Sure you can make 30% in a month by taking too much risk. In fact, when I first started, I nearly doubled my account in a month on several occasions. I gave it all back, though.

If you can’t hold on to it, what’s the point? My advice is that you learn to trade first. Don’t focus on returns as much in the beginning. See what you can make risking 1% – 2% of your account per trade or less (start with a much lower percentage while practicing).

If you find that you can make consistent (I mean over months and years) returns, start adding money to your account whenever you can. You can even get other investors to help you fund a significant account as long as you can prove that you make consistent returns.

Just my 2 cents. That’s probably not what you wanted to hear, but I’m trying to help you skip those rookie mistakes.

Hi chris, thanks for this article
it really wake me up to prevent most rookie’s mistake, and I hope I can do those points you mentioned above over time.

I’ve also read couple time that to get 10% profit/per month on consistent basis would be considered great even for pro trader.
But I wonder about the calculation, hope you can make this clear for me :p

– let’s say I take 1 trade a day, so about 20 trades a month
– my risk to reward ratio for every trade is 1:2
– every trade I risk 1%, so for every winning trade I get 2% profit
– my average winning percentage is only 50%
– I’m not compounding my profit, so my 1% risk towards initial capital is always the same amount
– I win 50% (10 trades) and lose 50% (10 trades)
– for winning trades I get 10 x 2% = 20%
– for losing trades I suffer 10 x 1% = 10%
– at the end I got 20%-10% = 10% profit that month

So my question is why is it hard even for pro trader to get more than 10% a month? And months with 2 digit profit % is not sustainable for the long run, maybe only 1-3 months per year (my understanding from your article).

For my example, I think my risk ratio 1:2 is moderate, risking 1% every trade is average, 20 trades a month is moderate between daytrader and swing trader, and 50% winning percentage is quite low for pro trader (I think pro trader should be on 60% – 70% winning percentage) and it still produce in ideal calculation roughly 10% a month.
So even though I’ve read couple times about ‘even pro trader hardly to get 10% a month consistently’ I still don’t understand the thought process behind it.

Please pardon me if I have weird logic on my simple calculation because I’m a newbie and still do paper trading.
It would be great if you can share your two cents about it.

I’m glad you’re finding this site useful and thanks for your question.

A 50% strike-rate with a 2:1 reward-to-risk ratio is like the holy grail of trading. Most experienced traders who use a 2:1 reward-to-risk ratio (high reward-rate) trading system have a strike-rate closer to 40%, in my experience.

Your strike rate can generally go up if you use a lower reward-to-risk ratio (high strike-rate) trading system because it’s easier to be right for a shorter amount of time.

I’m not advocating a high strike-rate system, though. In fact, I use a high reward-rate system myself. There are definitely pros that achieve 60%-70% (I’ve even seen 80%) with high strike-rate systems, but the profit percentage probably wouldn’t blow your mind.

Another thing you have to keep in mind is that typically when traders are bragging about high strike-rates, they are including small wins and early exits (not all of those wins were a full 2:1 profit target hit).

Lastly, 20 good, qualified trades in a single month are more than most good trading systems will produce. You don’t want to force yourself to take a trade every day. You have to take the qualified trades as they come. Sometimes that’s 1 or 2 in a week. At times, you may take multiple trades in a day.

The key is to be consistent. You need to try to take every qualified trade that comes along according to your trading plan but not more. New traders usually trade way too much. Experienced traders stay out of the market until the moment is just right. That means fewer but better quality trades and more profit.

The truth is that when you consider trading with your own hard-earned cash, brokers, fees, and everything else that you have to deal with as a trader apart from your trading system (and that’s assuming you’ve actually got a profitable trading system), you’re lucky if you end up with a slight edge at all. But a slight edge is all it takes if you’re persistent.

I don’t want to discourage you. Maybe you’ll beat the odds. If you’re not successful right away, though, just remember what you learned here. Be happy with small, consistent gains and build from there. Good luck!

Woww thank you so much for your reply chris. I wasn’t expecting such a detail answer, I’ll keep in mind. Really appreciate it sir!

No, you didn’t discourage me at all, instead I think it’s better to know bitter truth about trading world ASAP before I walk further. And the deeper I’m into this world the more I realise that I know nothing haha.

My focus for now isn’t profit but to protect my capital from losing. So which one is better in your opinion
1. Paper trading until at least I can protect my capital
2. Or open micro account so I get the taste of real tension (if it go into zero, it’s OK for me as I’ll take it as tuition fee)

Thanks again chris, it’s so kind of you to spare your time answering newbies like me.
Wish you the best ^^

No problem, adam. Glad I can help. To answer your question, you need a good trading system and trading plan first and foremost. If you don’t have those, you’re just gambling.

Maybe you already have a great trading system and a solid trading plan that you can stick to. If so, you should definitely demo trade (or paper trade) it first for a couple of reasons. The main reason is that you need to build confidence in your trading system and trading plan so that you can keep pulling the trigger when the drawdowns come (and they will come). No system is impervious to it.

That being said, you should start trading a small, live account (using the smallest trade/lot size your broker allows) as soon as you can. No amount of practice can prepare most people for risking their real, hard-earned cash. That’s usually when the psychological mistakes start happening.

Once you’re consistently profitable trading small amounts of your real money, gradually increase your trading size to 1% or 2% at the most. Some people risk more per trade, but I wouldn’t recommend it. Risk too much and you’ll wipe your account out during your first drawdown.

How forex trades are taxed

Find out the basics before you make your first foreign exchange trade

For traders in foreign exchange, or forex, markets, the primary goal is simply to make successful trades and see the forex account grow. In a market where profits and losses can be realized in the blink of an eye, many just want to make money in the short-term without really thinking about the longer-term ramifications. Nevertheless, it usually makes some sense to consider the tax implications of buying and selling forex before making that first trade.

Forex options and futures traders

For tax purposes, forex options and futures contracts are considered IRC section 1256 contracts, which are subject to a 60/40 tax consideration. In other words, 60% of gains or losses are counted as long-term capital gains or losses, and the remaining 40% is counted as short term.

Key takeaways

Aspiring forex traders might want to consider tax implications before getting started.

Forex futures and options are 1256 contracts and taxed using the 60/40 rule, with 60% of gains or losses treated as long-term capital gains and 40% as short-term.

Spot forex traders are considered "988 traders" and can deduct all of their losses for the year.

Currency traders in the spot forex market can choose to be taxed under the same tax rules as regular commodities 1256 contracts or under the special rules of IRC section 988 for currencies.

A 60/40 tax treatment is often favorable for individuals in high income tax brackets. For example, the proceeds of stocks sold within one year of their purchase are considered short-term capital gains and are always taxed at the same rate as the investor's ordinary income, which can be as much as 37%. When trading futures or options, investors are effectively taxed at the maximum long-term capital gains rate, or 20% (on 60% of the gains or losses) and the maximum short-term capital gains rate of 37% (on the other 40%).

For over-the-counter (OTC) investors

Most spot traders are taxed according to IRC section 988 contracts, which are for foreign exchange transactions settled within two days, making them open to treatment as ordinary losses and gains. If you trade spot forex, you will likely be grouped in this category as a "988 trader." if you experience net losses through your year-end trading, being categorized as a "988 trader" is a substantial benefit. As in the 1,256 contract category, you can count all of your losses as "ordinary losses," not just the first $3,000.

Which contract to choose

Now comes the tricky part: deciding how to file taxes for your situation. While options or futures and OTC are grouped separately, the investor can choose to trade as either 1256 or 988. Individuals must decide which to use by the first day of the calendar year.

IRC 988 contracts are simpler than IRC 1256 contracts. The tax rate remains constant for both gains and losses, which is better when the trader is reporting losses. Notably, 1256 contracts, while more complex, offer 12% more savings for a trader with net gains.

Most accounting firms use 988 contracts for spot traders and 1256 contracts for futures traders. That's why it's important to talk with your accountant before investing. Once you begin trading, you cannot switch from one to the other.

The rules outlined here apply to U.S. Traders with accounts at U.S. Brokerage firms.

Most traders naturally anticipate net gains, and often elect out of 988 status and into 1256 status. To opt out of a 988 status, you need to make an internal note in your books as well as file the change with your accountant. Complications can intensify if you trade stocks as well as currencies because equity transactions are taxed differently, making it more difficult to select 988 or 1256 contracts.

Keeping track

You can rely on your brokerage statements, but a more accurate and tax-friendly way of keeping track of profit and loss is through your performance record.

This is an IRS-approved formula for record-keeping:

Subtract your beginning assets from your end assets (net)

Subtract cash deposits (to your accounts) and add withdrawals (from your accounts)

Subtract income from interest and add interest paid

Add in other trading expenses

The performance record formula will give you a more accurate depiction of your profit/loss ratio and will make year-end filing easier for you and your accountant.

Things to remember

When it comes to forex taxation, there are a few things to keep in mind:

Mind the deadline: in most cases, you are required to select a type of tax situation by jan. 1. If you are a new trader, you can make this decision any time before your first trade.

Keep good records: it will save you time when tax season approaches. That will give you more time to trade and less time to prepare your taxes.

Pay what you owe: some traders try to beat the system and don't pay taxes on their forex trades. Since over-the-counter trading is not registered with the commodities futures trading commission (CFTC), some think they can get away with it. You should know that the IRS will catch up eventually, and the tax avoidance fees will be greater than any taxes you owed.

The bottom line

Whether you are planning on making forex a career path or are simply interested in dabbling in it, taking the time to file correctly can save you hundreds if not thousands in taxes. It's a part of the process that's well worth the time.

How much money can I make forex day trading?

Julie bang @ the balance 2021

The following scenario shows the potential, using a risk-controlled forex day trading strategy.

Forex day trading risk management

Every successful forex day trader manages their risk; it is one of, if not the most, crucial elements of ongoing profitability.

Forex day trading strategy

While a strategy can potentially have many components and can be analyzed for profitability in various ways, a strategy is often ranked based on its win-rate and risk/reward ratio.

Win rate

Risk/reward

A higher win rate for trades means more flexibility with your risk/reward, and a high risk/reward means your win rate can be lower and you'd still be profitable.

Hypothetical scenario

This means that the potential reward for each trade is 1.6 times greater than the risk (8 pips divided by 5 pips). Remember, you want winners to be bigger than losers.

Trading leverage

Trading currency pairs

This estimate can show how much a forex day trader could make in a month by executing 100 trades:

Gross profit is $4,400 - $2,250 = $2,150 if no commissions (win rate would likely be lower though)

Net profit is $2,150 - $500 = $1, 650 if using a commission broker (win rate would be like be higher though)

Slippage larger than expected loss

It won't always be possible to find five good day trades each day, especially when the market is moving very slowly for extended periods.

Slippage is an inevitable part of trading. It results in a larger loss than expected, even when using a stop-loss order. It's common in very fast-moving markets.

You can adjust the scenario above based on your typical stop loss and target, capital, slippage, win rate, position size, and commission parameters.

The final word

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Experience levels

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Best forex trading courses

Sarah horvath

Contributor, benzinga

Want to jump straight to the answer? The best forex broker for most people is definitely FOREX.Com

As the world becomes more and more interconnected and countries begin to rely on imports and exports to keep their economies functioning, forex trading has risen up as a popular alternative to stock trading. Forex traders enjoy the freer schedule that comes along with the decentralized currency market, which forgoes the traditional 9-to-5 schedule on which wall street operates.

Featured course: how to find the strongest forex trends

Build the foundation you need to trade the largest market on earth.

Best forex trading courses:

How to find the strongest forex trends

Forex 101 by benzinga

Asia forex mentor

Traders academy club

Platinum trading academy

Forex trading coach

Stock day and swing trading course by 2ndskies trading

Forex trading using python: basics by quantinsti

“forex trading A-Z” from udemy

Six figure capital

An online course is a great place to start. But which forex courses are worth your time and money? We’ve reviewed some of our favorite online forex courses as well as some tips to help you separate the legit instructors from the scammers.

Characteristics of a great forex course

Though most online forex courses will come along with their own unique teaching method, language choice, or “gimmick” to attract their target market, valuable and educational courses all share these three common characteristics:

1. The instructor keeps the material fun and engaging

Holding a student’s interest is much more difficult for an online instructor to do than an in-person instructor, as online courses must compete for a limited pool of attention with everything from television screens to children running around.

The best online courses use live demonstrations, video recordings, graphs, and other supplemental materials to break up massive walls of text and keep the students engaged.

2. The course is mechanically fully functional

Unlike a textbook, which allows you to flip to the material you need and dive in, online course material requires the instructor to possess a certain level of technical proficiency.

The best online forex courses keep the material up to date and fresh by ensuring that all links work and video clips play without excessive loading times or constant buffering.

Bonus points can be awarded to the courses that format materials for mobile or offer separate downloads aimed at on-the-go learners.

3. The course material is professionally presented

You can tell how much an instructor cares about his or her material by how professional its presentation is.

Keep an eye out for spelling errors, text that’s in an unusual or unreadable font, poor design choices, and material that seems to proceed in an illogical order, as these are all signs that the instructor has not thoroughly proofread his or her material.

If the instructor can’t be bothered to care about the course’s content, how can he or she expect his or her students to?

Our picks for the best forex courses

Based on the criteria above, we made our picks for the best forex courses available on the web at a wide range of price points.

1. How to find the strongest forex trends

Who is it for: beginner to advanced currency traders

Raghee horner loves trading the $5 TRILLION forex market because there’s always a bull market somewhere. And with good reason. Over 3 decades ago raghee cracked the code for finding the strongest trends. In fact, she’s never had a losing year in her entire career.

How does she consistently catch the strongest trends? With her step-by-step trend following formula and her proprietary tools. They allow her to get in during the earliest stages and extract extraordinary gains like: 165 pips in the AUDUSD ($1,650 per contract), 1000 pips in the AUDJPY ($9,200 per contract), and 284 pips in the EURUSD ($2,840 per contract).

Consistent results like that are almost unheard of. And that’s why raghee decided to distill her system into a self-paced online training called forex 101. Now even beginners can discover how to take advantage of these strong trends.

Because of the recent market volatility, there’s been a surge of interest in learning the forex. So for a limited time simpler trading is offering instant access to raghee’s forex 101 course recordings (including her proprietary tools) at a special 60% discount.

2. Forex 101 from benzinga courses

Who’s it for? Beginner to advanced traders

Price: on sale

Congrats! You’ve just landed on the most versatile, comprehensive forex trading platform on the market. Whether you’re just beginning to learn about forex trading or know a little bit about it already, benzinga’s forex trading course can help you learn everything you need to know, from forex pairs, pips and points (the basics) to fibonacci retracements. What’s a forex course without trade examples? Benzinga’s forex course offers AUD/USD sell trades and everything else in between — short selling, support and resistance levels, forex chart patterns and indicators. Don’t miss out on benzinga’s forex trading course at a low price for a limited time.

3. Asia forex mentor – one core program

Who it’s for: beginner to advanced traders

Price: $997

Ezekiel chew the founder and head of training at asia forex mentor isn’t your typical forex trainer. He is a recognized expert in the forex industry where he is frequently invited to speak at major forex events and trading panels. His insights into the live market are highly sought after by retail traders.

Ezekiel is considered as one of the top forex traders around who actually care about giving back to the community. He makes six figures a trade in his own trading and behind the scenes, ezekiel trains the traders who work in banks, fund management companies and prop trading firms.

His highly regarded one core program is considered as one of the best forex trading courses around. One of the modules that are highly raved is the road to millions formula that turned many new traders into full-time traders. It’s a ‘paradigm shift’ ezekiel says. “once you get that, you will change the way you look at trading and making money.”

The unique part of his teaching method? There are no slides, no screenshots, no fluffs but real strategies and actual scenarios that work in the live market.

4. Traders academy club

Who it’s for: beginner to advanced traders

Price: varies on bundle

Traders academy club was designed by vladimir ribakov, an internationally certified financial technician with over 12 years of experience in the forex market. Traders academy club is designed for select community members with a passion for trading forex, cfds and stocks. The course helps you trade at a higher level whether you’re a beginner or experienced trader.Ribakov provides the right tools for traders to:

Avoid common pitfalls

Tap into a sound trading approach

Adopt the technical, fundamental and psychological components of trading

Discover new trading ideas

You can join the private telegram group with other successful traders and learn practical trading strategies under ribakov. Join traders academy club now.

5. Platinum trading academy

Who’s it for? Beginning to advanced traders

Price: based on program

Do you want to become a part-time or full-time trader? Learn to trade with platinum trading academy, an easy-to-use trading system that offers premium technical analysis and personal mentoring. Once you complete the course, you’ll get access to a funded account. You don’t need to travel or go to forex trading seminars or trading webinars — simply attend platinum trading academy’s premium one-to-one financial trading consultations.

You can tap into training for beginners, full-time traders and learn how to comprehensively improve your trading mindset. Start your journey today with platinum training academy.

6. Forex trading coach

Who’s it for? Beginning to advanced traders

The forex trading coach can fast-track your forex trading and help you whether you’re a beginner or not. Andrew mitchem, a full-time currency trader, investor and forex trading coach, developed a system that has makes forex trading profitable.

Ready to learn? You can get there in 90 days. In fact, mitchem claims that rookies are better traders — you’re more likely to progress (and profit) faster than someone with years of experience!

The forex trading coach highlights:

Risk elimination: he shares his “reward: risk” strategy, which delivers profitable trades with a small amount of funds on the line.

Less time trading: this personalized trading method means you can do your daily trading in as little as 30 minutes.

Your trading identity: you’ll learn more about yourself and your trading strategies and philosophies as you go.

Training: your demo account is how you learn not to lose lots of money when you hit the live markets.

Mindset: your mindset matters. You learn how to quickly transform into a proper business.

7. Stock day and swing trading course by 2ndskies trading

Stock day and swing trading course

Who it’s for: beginner to intermediate traders

2ndskiesforex’s stock day and swing trading course teaches you how to consistently find trade setups and build a profitable edge from trading stocks. You can:

Learn a meta strategy for trading any market or sector

Use trading strategies for day and swing trading stocks

Get access to 2ndskies forex trader webinars

Chris capre, the founder of 2ndskies trading, is the instructor for this course. He’s been trading for 20 years, is a former broker on wall street, traded for a hedge fund and been teaching traders to become profitable for the last 12 years through 2ndskies trading. He focuses on using his extensive trading experience, his training in neuroscience and his strong pattern recognition skills to teach you how to trade stocks profitably.

8. Forex trading using python: basic

Who’s it for? Beginning traders

Forex (FX or foreign exchange) trading is the process of buying and selling of currency pairs in the stock markets. Quantra and FXCM present this certificate course for both beginner and expert forex traders to learn forex trading using python.

In a span of 90 minutes, you stand to learn more in less time with this course. You learn about strategy creation, backtesting, execution, analysis, and risk management. With lifetime access and downloadable codes, this course is a must-have!

So, let's see, what we have: here is a scenario for how much money a simple and risk-controlled forex day trading strategy can make, and guidance on how to achieve that level of success. At forex earning