The most common question related to the financial market is how much can you earn trading Forex?
This is understandable, everyone has heard stories about how someone quit his job and became a millionaire – now trading on the Forex market for his own pleasure, lying on the beach and sipping an expensive drink somewhere on an exotic island.
Everyone has heard such stories but not everyone believes in them. In most cases such stories are not objective and do not show the reality about trading forex.
There is no easy money
To begin with, Forex is not a “get rich fast” scheme. It’s a serious business and like any other business you will need one main thing to begin. That’s right, an investment!
Of course, you can start trading with $ 5 as some brokers offer micro accounts and they are even ready to give you a leverage of 1: 500. But if you think for a moment about what your profit can be with $ 5 , you will realize that you will not be able to earn even 100$.
If you disagree with us and say that someone with $ 5 deposit makes $ 100 a month we will tell you that this is not a real trading strategy and most likely that trader gambled and got lucky.
GAMBLING TRADERS ARE NOT TRADING FOR MONEY – THEY ARE TRADING FOR THE SAKE OF SENSATIONS.
Here, we are talking about business. Any business requires investments of time and money. Forex is not an exception in this regard. The golden rule of trading, which should hang in a frame in front of the monitor of any trader is – “Never risk more than 5% of the capital in one transaction, you have to be sure that tomorrow you will have money to continue trading”.
The percentage figure can vary from trader to trader, someone say 3%, someone 7%, but not more than 10% of your capital should be risked in one transaction!
Suppose you are a desperate trader who neglects all the rules of management and risks in one transaction 25% of his capital. We will analyze the specific situation: you have $ 100, which you are ready to spend on trading.
You open an account with a broker and think that the price of EUR / USD currency pair will go down. You open a Sell order, your stop is 25 pips, the profit is also 25 pips, the price for one pip is $ 1. That is, if the deal closes at a loss, you will lose $ 25, which is 25% of your deposit. You think that you can earn $ 25 easily!
It turns out that it will only take 4 unprofitable transactions of 25 pips for you to lose your entire deposit. Therefore, it turns out that you did not protect your capital and tomorrow you will have to deposit again into your account.
How much can you earn trading forex?
But, we digressed from the topic, because the topic of this article is how much you can earn trading Forex, and not how much you may potentially lose. We will answer specifically this question.
Suppose that you have already passed all the stages of becoming a professional trader, you have learned a lot, tested, you have a strategy and you trade profitably.
The average income you can expect as a professional trader will be about 10% per month and sometimes -100% per year.
Why not 120%? Because not every month you will end with a profit, so we are stating the average. Believe us, 100% is just an excellent figure, maybe you’ve heard about the miracle about traders who make more than 1000% a year.
Have realistic goals
We do not personally know such traders and we think that they have not been in that business for a long time. Earning a huge profit is not easy. Trading on a real account is much different than trading on a demo account. Managers of large hedge funds make about 20-40% per annum. However, they are handling huge capital, which in the end gives a very large payout.
Now you can basically calculate how much on average you can earn trading forex per month or year in case you trade profitably. Putting $ 100 as a deposit will make for the year another $ 100, putting $ 1000, you will make for the year somewhere around $ 1000 and so on. So be realistic with your goals and calculations.