Forex realistic returns - how much should you expect? (2024)

How can you have decent returns trading Forex?

In case you are a beginner trader, any kind of return through Forex trading is considered a decent return, as long as the trading balance is positive. Most novice traders lose money. Professionals call it tuition fees. Beginners have unrealistic expectations about trading. They think that they can double their money overnight, which leads them to take huge risks and blow up their accounts. Traders start trading and overestimate what markets can give them at the beginning. After the series of blown up accounts, the projections change radically, and they start underestimating the Forex market.

Returns depend on various factors. It depends on whether you have a profitable strategy or not. Can you flawlessly execute that strategy? Do you have the discipline? In addition, returns depend on the size of your trading balance. It's very difficult to have decent returns on a thousand dollar account. In general, most professional traders recommend having at least a $5k trading account.

One of the most popular strategies to keep the Forex annual income consistent is to have a top-notch risk management strategy and work hard on finding trading opportunities.

Forex realistic returns - how much should you expect? (1)

Great trading is easy. It's because traders have already planned how to trade in advance. Demo and micro accounts are a great help in this regard. They help traders develop and test their strategies before risking significant capital. Once you have a trading method that fits your personality and brings you profits, implementing risk management is not that difficult. Risk management typically consists of risking up to 1 or 5 % of your trading capital per trade. Risk management involves spreading risks on many traders so that one trade never becomes too significant.

The thing is that Forex realistic returns depend on your risk appetite. The higher the risks, the more profits potential. However, it's critical to note that taking high risks doesn't mean placing random orders. Random trading is gambling and has nothing to do with professional trading. Professionals plan their trades well and trade their plans. With increased risks, comes increased chances of losing money.

What to focus on for decent Forex returns

Decent returns from forex depend on many factors. It's critical to have a winning strategy. Your strategy should include a well put together trading plan and trading journal for learning from your mistakes. It's essential to be able to find trading setups that give you an edge, mathematical advantage in trading. After you develop a trading system, risk management and discipline become the number one priority. Lack of discipline to follow their winning strategy is what prevents most traders from becoming profitable.

It's worth mentioning that trading profitably requires a clear mind. Humans are not trading algorithms, and we cannot always perform well. It's crucial to avoid placing orders when you are sick or tired. Trading decisions need to be made using a sharp, clear thinking head.

A trader should not be dependent on the profits from trading. When traders pay bills from the trading revenue, they will overtrade during drawdown periods and increase losses. It's always wise to have emergency funds or side businesses. Keep in mind that trading is not a job, retail trading is like running your own business.

Forex trading average return

Calculating average forex trader returns is difficult because there are many types of traders. There are institutional, retail, day and position traders. Profitability depends on various factors, and many traders lose money instead of increasing their trading balance. Generally forex trading monthly return can be as high as 10% of a trading capital, however, that can only happen if a trader has a well put together trading strategy. Trading is not a job, and there's no steady paycheck at the end of each month. There will be some profitable months and some negative periods. The key to success is to have more winning trades or trades with larger payouts to cover the losses.

It's critical for traders to have a clear idea about realistic forex monthly returns. In investing, higher the risks, higher the potential for profits. Most professional traders only risk up to 1 to 5% of their trading capital per trade. And risk to reward ratio is typically 1:1 or greater. Therefore, it's realistic to make up to 10% of your trading balance per month. However, the number is not steady and might be negative during drawdown periods. Traders should have savings and not be dependent entirely on income from trading. If you have bills to pay and trading is not going well, you might start over trading and blow up your trading account.

It's also critical for traders to think in terms of percentage points and not in terms of sheer numbers. Calculating forex trading percentage returns can help traders reinvest their profits and increase income using compounding. Investing a million dollars is more difficult psychologically than investing a hundred USD. The reason is that during the drawdown periods, you have much less to lose. On the other side, when trading goes well, a million invested can give you amazing profits.

If you have a sufficient amount of trading capital and trade using good risk management strategy, it's realistic to have up to 50% yearly returns. However, if your trading capital is too large, it's highly likely that you will take small risks in terms of percentage points and yearly returns will be smaller. Returns mainly depend on your trading strategy, your level of discipline and the market conditions.

Factors that can positively or negatively impact the returns

Investor returns can be influenced by several key factors, and understanding them is crucial for making informed decisions. One significant factor is changing market conditions. When liquidity drops and the market becomes more unpredictable (volatile), it can hurt active traders. This happens when trading transactions are reduced and there are fewer opportunities. In thinner markets, where there are fewer buyers and sellers, slippage can occur, making it difficult for investors to execute trades at desired price.

Economic events also play a major role. Certain news releases, like decisions on interest rates, unemployment numbers, inflation rates, and data on manufacturing and trade, can have a major impact on the markets. Investors need to pay attention to these events as they can influence market sentiment and affect investment decisions. Additionally, natural disasters such as droughts or floods can impact returns, especially for those invested in agriculture. These events can disrupt supply chains and production, causing market volatility.

Geopolitical factors are one more consideration. Trade wars and territorial disputes can have a negative impact on countries involved and their economies. The uncertainty stemming from these conflicts can lead to market downturns, affecting various investor types. It's important for investors to be aware of geopolitical developments, as changes in international relations can affect risk and return expectations.

In addition, there are events that cannot be predicted in advance, such events are called “Black Swans”. There are no ways that investors can avoid such events. You cannot prepare for something you know nothing about. However, smart investors and traders always keep emergency funds to deal with such events accordingly.

Key takeaways on realistic Forex returns

How much do Forex traders make? Well, that depends on how much they deposit and how often they trade. In addition, many traders lose money. For profitability, it's crucial to have a winning strategy and be able to manage your emotions.

To make a lot of money, traders need to invest a lot of money. However, one alternative is to trade professionally, show consistency and attract investors. Investors love consistent profits and small drawdowns. Many mutual fund managers have decent returns from trading commissions.

It's difficult to say exactly how much money traders make as there are all kinds of traders from intraday, position, institutional to retail traders. However, making up to 30-50% per year is a realistic goal. It's worth mentioning that higher the risk appetite, higher the potential for rewards, however, chances of losing money also increases when taking larger risks.

Forex realistic returns – FAQ

How much do Forex professionals make?

When starting out on a Forex market, you need to find out how much do professional Forex traders make in the first place. Depending on how much time, effort and funds they dedicate and considering that they do this as a full-time job, it’s likely for a professional’s average income to be around 10-20% of what they have to trade with.

Many professional traders work for large investment companies, and they are called institutional traders. According to some estimates, as of 2022, average institutional Forex traders make $60k a year.

Is Forex trading worth it?

In most cases, no. Nearly 90% of traders are usually unsuccessful and don’t have any Forex trading returns whatsoever.

However, those that dedicate time and energy to learning how the market works, researching all of their currency pairs and being prepared for trends tend to have at least some kind of return.

Forex trading is not worth it if a trader is not ready to take risks and learn completely new things he or she has never heard of.

Should I read Forex success stories?

If you're interested in how much you can make trading Forex potentially, then definitely yes. Success stories are always something that can give a trader the motivation to continue learning and trading on the market. However, some of them are not supposed to be taken seriously.

For example, a lot of successful Forex traders have mentioned that the risks that got them where they are now, would have never been taken if they had their current knowledge. Therefore, it’s safe to say that most successful Forex traders don’t recommend their strategies due to how risky they are.

Can Forex be a passive income?

Yes. Traders use automated trading algorithms to earn money from trading. In addition, they use copy trading and trading platforms to copy other successful traders. Traders can choose the trader they wish to copy. Usually traders sell their signals, however, you can also find traders that enable others to copy them for free. When copying someone, it's important to take into consideration the drawdowns that person has experienced. High drawdowns are not desirable for coping. For best results, it's critical to pick the ones with steady growth. In addition, some traders are not displaying their total capital, they only show gains in terms of percentage points, which can be tricky. It's more difficult to double a million dollars than it is to double a 100 USD.

What is the most profitable strategy?

There is no such thing. If there was, then everybody would be using it. In most cases, whenever a strategy comes up with a decent success rate, people use it extensively and help the market adapt to it. Therefore, most of the successful strategies are usually kept secret by those who make them. It's worth mentioning that using trading strategies developed by others might not work for you. Every trader is different and there are a million ways to make money in the market. The key to success is in finding a trading strategy that best fits your personality.

Should I quit my job for Forex?

If you have a job and wish to trade full time, it's important to note that trading will not give you a steady paycheck at the end of each month. One way of approaching trading is to swing trade. Swing trading doesn't require sitting in front of a PC screen all day. In fact, many traders do have full time jobs and swing trade. You can also take a vacation from your work and see if trading full time is the way to go.

Forex realistic returns - how much should you expect? (2024)

FAQs

Forex realistic returns - how much should you expect? ›

For the majority of professional traders, the average Forex monthly return is between 1 to 10 per cent per month.

How much return can I expect from forex trading? ›

Generally forex trading monthly return can be as high as 10% of a trading capital, however, that can only happen if a trader has a well put together trading strategy. Trading is not a job, and there's no steady paycheck at the end of each month. There will be some profitable months and some negative periods.

What is the average return on forex trading? ›

In Forex trading the excellent return on investment is 20% annually. Active investor in stocks or Forex is usually happy with a 15-20% annual return. According to a study, the average Forex trader can expect to achieve a return of 50-100% per year.

What is a good return on forex? ›

The average monthly income ranges from 15-25%. However, some traders prefer to use a strategy, which is characterized by moderate or high risk. In this case, the rate of return increases to 25-50%. Practice shows that higher risks usually have the opposite effect.

What is a realistic profit from forex trading? ›

Your average monthly profit will be less than 5%.

Of course, as with any competitive endeavor there will be outliers who will perform much better than the average winning trader. But for the most part, a reasonable profit expectation for most would be an average of 2-4% per month. Surprised? Most new traders would be.

Is 5% a month realistic forex? ›

5-6% per month in average over 12 months is possible and realistic by risking maximum 2% per trade. This rate doubles the account. The big achievement is to minimize the drawdown. As Hedginghog mentioned, a good trader spends more time trying to minimize the losses than finding ways of winning more.

What is 90% rule in forex? ›

The 90 rule in Forex is a commonly cited statistic that states that 90% of Forex traders lose 90% of their money in the first 90 days. This is a sobering statistic, but it is important to understand why it is true and how to avoid falling into the same trap.

What is a realistic win rate in Forex? ›

Most professional traders have a win rate near 50% or less. They are profitable because they make more on winning trades than they lose on losing trades.

Is $100 enough for Forex? ›

A $100 deposit is sufficient initial capital to open a forex trade in a real Forex account without breaking risk management rules. On average, traders with medium-level experience can earn over 10% of the deposit per month. Professional traders' earnings can exceed 500% a year.

Is $500 enough to trade Forex? ›

This forex trading style is ideal for people who dislike looking at their charts frequently and who can only trade in their free time. The very lowest you can open an account with is $500 if you wish to initiate a trade with a risk of 50 pips since you can risk $5 per trade, which is 1% of $500.

Can forex make one a millionaire? ›

The answer is yes! Forex can make you a millionaire if you are a hedge fund trader with a large sum. But forex from rags to riches for the majority is usually a rocky and bumpy ride which often leaves some traders in their dreams.

How much do forex traders make per day? ›

On average, a forex trader can make anywhere between $500 to $2,000 per day. However, this figure can vary significantly depending on market conditions, trading strategy, and risk management techniques. Some traders may make more than $2,000 in a single day, while others may make less or even incur losses.

Who is the richest forex trader? ›

Ray Dalio – The Richest Forex Trader in the World

Ray Dalio is widely recognized as the wealthiest forex trader in the world. With a net worth of billions, Dalio's success in the forex trading industry is a testament to his exceptional skills and strategies.

How much profit can I make from forex? ›

On average, a forex trader can make anywhere between $500 to $2,000 per day. However, this figure can vary significantly depending on market conditions, trading strategy, and risk management techniques. Some traders may make more than $2,000 in a single day, while others may make less or even incur losses.

How much does the average forex trader make? ›

Forex Trader Salary
Annual SalaryWeekly Pay
Top Earners$192,500$3,701
75th Percentile$181,000$3,480
Average$101,533$1,952
25th Percentile$57,500$1,105

What is typical ROI in forex? ›

While it is not unusual to see an ROI of 50% with a good trading strategy and some appropriately made trading decisions during high volatility, it is still rather unusual. In fact, investors mostly agree that any positive number is a good ROI. An excellent ROI is 20%, while most active traders are happy with 10-15%.

Is $500 enough to trade forex? ›

This forex trading style is ideal for people who dislike looking at their charts frequently and who can only trade in their free time. The very lowest you can open an account with is $500 if you wish to initiate a trade with a risk of 50 pips since you can risk $5 per trade, which is 1% of $500.

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