How much does a successful forex trader make

Top three most successful Forex traders ever.

Whether you are new to trading Forex or an old hand at the currency markets, you are likely to share one key aspiration:

One way to improve is to learn by example and to look at some of the most successful Forex traders in the world. In this article, you'll learn about what the top Forex traders in the world have in common and how those strengths helped them to make huge profits.

While you may have heard statistics thrown around suggesting that the ratio of successful Forex traders to unsuccessful ones is small. There are at least a couple of reasons to be sceptical about such claims.

Firstly, hard data is hard to come by on the subject because of the decentralised, over-the-counter nature of the Forex market. But there is plenty of education material and working Forex trading strategies available to better equip your trading performance.

Second, we would expect the distribution of winners and losers to follow something of a bell-curve, meaning that there would be:

very few large losers a great number of small losers a great number of small winners; and very few large winners.

The data that is available from Forex and CFD firms (albeit just a very small slice of the vast global FX market) suggests that the rarest people are very successful traders. Most people stop once they start losing beyond a certain threshold, whereas the big winners keep on trading.

The number of small losers slightly outweighs the number of small winners, mainly because of the effect of market spread. So the percentage of successful Forex traders is not substantially smaller than unsuccessful ones. There is little doubt, though, that the most successful traders are an elite few.

However, by looking at a select group of famous Forex traders we can see that they have a few things in common.

Discipline — the ability to recognise when a trade is wrong and therefore minimise losses. Risk control — having a strong understanding of a trade's risk/reward. You can read more about this in our risk management guide. Courage — the willingness to be different from the rest of the crowd, most of the time. Astuteness — judging how perceptions are shaping market trends.

The upshot of these characteristics has been consistent and large profits.

The world's best Forex trader.

Let's begin our review of Forex successful traders by looking at one of the industry's legendary beacons of good fortune, George Soros.

Mr Soros is known as one of the greatest investors in history. He sealed his reputation as a legendary money manager by reportedly profiting more than £1 billion from his short position in pound sterling. He did so ahead of Black Wednesday , 16 September 1992.

At the time, Britain was a part of the Exchange Rate Mechanism (ERM). This mechanism required the government to intervene if the pound weakened beyond a certain level against the Deutsche Mark.

Soros successfully predicted that a combination of circumstances—including the then high level of British interest rates and the unfavourable rate at which Britain had joined the ERM—had left the Bank of England vulnerable.

Britain's commitment to maintaining the pound's value against the Deutsche Mark meant intervening when the pound weakened by either buying sterling or raising interest rates or both. The recession meant that higher interest rates were very painful for the rest of the economy. This hindered investment when encouragement was needed instead.

Economists at the Bank of England recognised that the appropriate level of interest rates were far lower than those required to prop up the pound as part of the ERM. But the value of sterling was maintained because of the UK's public commitment to buying sterling.

In the weeks leading up to Black Wednesday, Soros used his Quantum Fund to build a large position short of sterling. But on the eve of Black Wednesday , comments came from the President of the German Bundesbank. These comments suggested certain currencies could come under pressure.

And this led Soros to increase his position considerably.

When the Bank of England began buying billions of pounds on the Wednesday morning, it found the price of the pound was little moved. This was due to the flood of selling in the market from other speculators following Soros' lead.

A last ditch attempt to hike UK rates that had briefly hit 15%, proved futile. When the UK announced its exit from the ERM and a resumption of a free-floating pound, the currency plunged 15% against the Deutsche Mark and 25% against the US dollar.

As a result, the Quantum Fund made billions of dollars and Soros became known as the man who broke the Bank of England .

Want to know the best part?

Although Soros' short position in the pound was huge, his downside was always relatively restricted. Leading up to his trade, the market had shown no appetite for sterling strength. This was demonstrated by the repeated need for the British government to intervene in propping up the pound.

Even if his trade had gone wrong and Britain had managed to stay in the ERM, the state of inertia would have more likely prevailed than a large appreciation in the pound.

Here we see Soros' strong appreciation of risk/reward - one of the facets that helped carve his reputation as the best Forex trader in the world. Rather than subscribing to the traditional economic theory that prices will eventually move to a theoretical equilibrium, Soros deems the theory of reflexivity to be more helpful in judging the financial markets.

This theory suggests there is a feedback mechanism between perception and events. In other words, the perceptions of market participants help to shape market prices which in turn reinforce perceptions.

This was played out in his famous sterling short, where the devaluation of the pound only occurred when enough speculators believed the Bank of England could no longer defend its currency.

He once told the Wall Street Journal "I'm only rich because I know when I'm wrong". The quote demonstrates both his willingness to cut a trade that is not working and the discipline shared by the most successful Forex traders.

Who else counts?

So George Soros is number 1 on our list as probably the best known of the world's most successful Forex traders and certainly one of the globe's highest earners from a short term trade.

But who else is up there?

Stanley Druckenmiller.

George Soros casts a long shadow and it shouldn't come as too much of a surprise that the most successful Forex trader has ties to another of the names on our list.

Stanley Druckenmiller considers George Soros his mentor. In fact, Mr. Druckenmiller worked alongside him at the Quantum Fund for more than a decade. But Druckenmiller then established a formidable reputation in his own right, successfully managing billions of dollars for his own fund, Duquesne Capital.

As well as being part of Soros' famous Black Wednesday trade, Mr Druckenmiller boasted an incredible record of successive years of double-digit gains with Duquesne before retiring. Druckenmiller's net worth is valued at more than $2 billion.

Druckenmiller says that his trading philosophy for building long-term returns revolves around preserving capital and then aggressively pursuing profits when trades are going well. This approach downplays the importance of being right or wrong.

Instead, it emphasises the value of maximising the opportunity when you are right and minimising the damage when you are wrong. As Druckenmiller said when interviewed for the celebrated book The New Market Wizards , "there are a lot of shoes on the shelf; wear only the ones that fit."

Bill Lipschutz.

Oddly enough, Bill Lipschutz made profits numbering in the hundreds of millions of dollars at the FX department of Salomon Brothers in the 1980s - despite no previous experience of the currency markets.

Often called the Sultan of Currencies, Mr Lipschutz describes FX as a very psychological market. And like our other successful Forex traders, the Sultan believes market perceptions help determine price action as much as pure fundamentals.

Lipschutz also agrees with Stanley Druckenmiller's view that how to be a successful trader in Forex, is not dependant on being right more often that you are wrong. Instead, he stresses that you need to work out how to make money when being right only 20 to 30 per cent of the time.

Here's some of Lipschutz's other key tenets.

Any trading idea needs to be well reasoned before you place the trade. Build a position as the market goes your way and exit the same way.

Then start to ease up once there are signs that the fundamentals and the price action are beginning to change. There is a need to be aware of the market's focus.

FX is a 24-hour market and doesn't stop moving when you go to bed.

Lipschutz also stresses the need to manage risk, saying that your trading size should be chosen to avoid being forced out of your position if your timing is inexact.

How successful is a successful Forex trader?

We've looked at the biggest Forex successful traders, but there is an army of profitable traders out there. Joining the list of people who are able to consistently turn a profit each month trading FX, is an achievable goal.

So, what's the bottom line?

Well, even the most successful trader had to begin somewhere and if you can regularly generate profits - you can consider yourself a successful Forex trader.

Hopefully this article has given you some insights into traits shared by the most successful Forex traders. Now maybe you should try to top the Forex trader's list yourself, by participating in our ForexBall demo contest.

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How Much Do Currency Traders Make?

Is That Even The Right Question To Ask. Now?

Currency traders are a bit of a rare breed. What they make can vary widely depending on what type of trader they are and how much experience they have.

In general, how much money you make will depend on what currencies you trade, what leverage you use, and how much capital you have.

Why This Is the Right & Wrong Question to Ask at the Same Time.

Of course, the reason you’re here in the first place because you’re looking to make money.

No one falls you for that, and that’s perfectly good reason to embark on foreign exchange trading. The problem with the question in my view is that it’s a long-term goal to make money consistently in the FX market is short-term goals have to come ​​before the long-term goals for the long-term goals to be achieved.

Just like a concert violinist who want to perform on stage for paying customers for the joy of it, they will need to have years of short-term goals of building the skills necessary to get there. The Forex traders are no different.

There is no shortage of people telling you how to trade or waste to trade, but you will need to find the skills and hone the skills for the strategy you will trade.

Therefore, the better question to ask in my opinion is:

What skills are required to make money in FX trading?

This site works to answer those questions and more as you started in your FX trading.

Just like the violinist needs to know what skills need to be learned before they can perform on stage, the FX trader will have skills they will need a master before they can think about how much they can withdraw a monthly basis consistently.

Here Is How Your Earnings Are Affected.

First: How much money you have.

Forex is fairly risky, whether you are trading high or low risk, the amount of trading you can do will always depend on how much money you have to trade.

Second: How much leverage you use.

In forex trading, brokers offer leverage, which means you can put on trades for more than you have. Might be a good thing, or might be a bad thing, but either way, it affects your trading. If you like to take heavy risks, you can see heavy account fluctuations in the positive or negative.

Third: What kind of currencies you trade.

Some currencies are slow movers. They are good for beginners, or large traders. Obviously, if you are trading fast moving currencies, it can make a big difference in what you make.

What you make is up to you, but the foreign exchange market is risky, and it is not for everyone. It takes a trader that can take an honest look at themselves and learn from their mistakes.

For more information on forex trading and the latest news and updates, you can follow me on facebook and twitter.

Why Do Many Forex Traders Lose Money? Here is the Number 1 Mistake.

Big data analysis, algorithmic trading, and retail trader sentiment.

We look through 43 million real trades to measure trader performance Majority of trades are successful and yet traders are losing Here is what we believe to be the number one mistake FX traders make.

W hy do major currency moves bring increased trader losses? To find out, the DailyFX research team has looked through over 40 million real trades placed via a major FX broker's trading platforms. In this article , we look at the biggest mistake that forex traders make, and a way to trade appropriately .

Why Does the Average Forex Trader Lose Money?

The average forex trader loses money, which is in itself a very discouraging fact. But why? Put simply, human psychology makes trading difficult.

We looked at over 43 million real trades placed on a major FX broker's trading servers from Q2, 2014 – Q1, 2015 and came to some very interesting conclusions. The first is encouraging: traders make money most of the time as over 50% of trades are closed out at a gain.

Percent of All Trades Closed Out at a Gain and Loss per Currency Pair.

Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015.

The above chart shows results of over 43 million trades conducted by these traders worldwide from Q2, 2014 through Q1, 2015 across the 15 most popular currency pairs. The blue bar shows the percentage of trades that ended with a profit for the trader. Red shows the percentage of trades that ended in loss. For example, the Euro saw an impressive 61% of all trades closed out at a gain. And indeed every single one of these instruments saw the majority of traders turned a profit more than 50 percent of the time.

If traders were right more than half of the time, why did most lose money?

Average Profit/Loss per Winning and Losing Trades per Currency Pair.

Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015.

The above chart says it all. In blue, it shows the average number of pips traders earned on profitable trades. In red, it shows the average number of pips lost in losing trades. We can now clearly see why traders lose money despite being right more than half the time. They lose more money on their losing trades than they make on their winning trades .

Let’s use EUR/USD as an example. We see that EUR/USD trades were closed out at a profit 61% of the time, but the average losing trade was worth 83 pips while the average winner was only 48 pips. Traders were correct more than half the time, but they lost over 70% more on their losing trades as they won on winning trades. The track record for the volatile GBP/USD pair was even worse. Traders captured profits on 59% of all GBP/USD trades. Yet they overall lost money as they turned an average 43 pip profit on each winner and lost 83 pips on losing trades.

What gives? Identifying that there is a problem is important in itself, but we’ll need to understand the reasons behind it in order to look for a solution.

Cut Losses, Let Profits Run – Why is this So Difficult to Do?

In our study we saw that traders were very good at identifying profitable trading opportunities--closing trades out at a profit over 50 percent of the time. They utlimately lost, however, as the average loss far outweighed the gain. Open nearly any book on trading and the advice is the same: cut your losses early and let your profits run.

When your trade goes against you, close it out . Take the small loss and then try again later, if appropriate. It is better to take a small loss early than a big loss later.

If a trade is in your favor, let it run . It is often tempting to close out at a small gain in order to protect profits, but oftentimes we see that patience can result in greater gains.

But if the solution is so simple, why is the issue so common? The simple answer: human nature. In fact this is not at all limited to trading. To further illustrate the point we draw on significant findings in psychology.

A Simple Wager – Understanding Human Behavior Towards Winning and Losing.

What if I offered you a simple wager on a coin flip? You have two choices. Choice A means you have a 50% chance of winning 1000 dollars and 50% chance of winning nothing. Choice B is a flat 450 point gain. Which would you choose?

50% chance to Win 1000.

50% chance to Win 0.

Expect to win $500 over time.

Over time it makes sense to take Choice A—the expected gain of $500 is greater than the fixed $450. Yet many studies have shown that most people will consistently choose Choice B. Let’s flip the wager and run it again.

50% chance to Lose 1000.

50% chance to Lose 0.

Expect to lose $500 over time.

In this case we can expect to lose less money via Choice B, but in fact studies have shown that the majority of people will pick choice A every single time.

Here we see the issue. Most people avoid risk when it comes to taking profits but then actively seek it if it means avoiding a loss. Why?

Losses Hurt Psychologically far more than Gains Give Pleasure – Prospect Theory.

Nobel prize-winning clinical psychologist Daniel Kahneman based on his research on decision making. His work wasn’t on trading per se but clear implications for trade management and is quite relevant to FX trading. His study on Prospect Theory attempted to model and predict choices people would make between scenarios involving known risks and rewards.

The findings showed something remarkably simple yet profound: most people took more pain from losses than pleasure from gains .

It feels “good enough” to make $450 versus $500 , but accepting a $500 loss hurts too much and many are willing to gamble that the trade turns around.

This doesn’t make any sense from a trading perspective—50 0 dollars lost are equivalent to 50 0 dollars gained; one is not worth more than the other. Why should we then act so differently?

Prospect Theory: Losses Typically Hurt Far More than Gains Give Pleasure.

Taking a purely rational approach to markets means treating a 50 point gain as morally equivalent to a 50 point loss. Unfortunately our data on real trader behavior suggests that the majority can’t do this. We need to think more systematically to improve our chances at success.

Avoid the Common Pitfall.

Avoiding the loss-making problem described above is very simple in theory: gain more in each winning trade than you give back in each losing trade. But how might we do it concretely?

When trading, always follow one simple rule: always seek a bigger reward than the loss you are risking. This is a valuable piece of advice that can be found in almost every trading book.

Typically, this is called a “ reward/risk ratio ”. If you risk losing the same number of pips as you hope to gain, then your reward/risk ratio is 1-to-1 (also written 1:1). If you target a profit of 80 pips with a risk of 40 pips, then you have a 2:1 reward/risk ratio.

If you follow this simple rule, you can be right on the direction of only half of your trades and still make money because you will earn more profits on your winning trades than losses on your losing trades.

What ratio should you use? It depends on the type of trade you are making. We recommend to always use a minimum 1:1 ratio . That way, if you are right only half the time, you will at least break even.

Certain strategies and trading techniques tend to produce high winning percentages as we saw with real trader data. If this is the case, it is possible to use a lower reward/risk ratio—such as between 1:1 and 2:1. For lower probability trading, a higher reward/risk ratio is recommended, such as 2:1, 3:1, or even 4:1. Remember, the higher the reward/risk ratio you choose, the less often you need to correctly predict market direction in order to make money trading. We will discuss different trading techniques in further detail in subsequent installments of this series.

Stick to Your Plan: Use Stops and Limits.

Once you have a trading plan that uses a proper reward/risk ratio, the next challenge is to stick to the plan. Remember, it is natural for humans to want to hold on to losses and take profits early, but it makes for bad trading. We must overcome this natural tendency and remove our emotions from trading. The best way to do this is to set up your trade with Stop-Loss and Limit orders from the beginning .

This will allow you to use the proper reward/risk ratio (1:1 or higher) from the outset, and to stick to it. Once you set them, don’t touch them (One exception: you can move your stop in your favor to lock in profits as the market moves in your favor).

Managing your risk in this way is a part of what many traders call “money management” . Many of the most successful forex traders are right about the market’s direction less than half the time. Since they practice good money management, they cut their losses quickly and let their profits run, so they are still profitable in their overall trading.

Does Using 1:1 Reward to Risk Really Work?

Our data certainly suggest it does. We use our data on our top 15 currency pairs to determine which trader accounts closed their Average Gain at least as large as their Average Loss—or a minimum Reward:Risk of 1:1. Were traders ultimately profitable if they stuck to this rule? Past performance is not indicative of future results, but the results certainly support it.

Our data shows that 53 percent of all accounts which operated on at least a 1:1 Reward to Risk ratio turned a net-profit in our 12-month sample period. Those under 1:1? A mere 17 percent.

T raders who adhered to this rule were 3 times more likely to turn a profit over the course of these 12 months—a substantial difference.

Data source: Derived from data from a major FX broker* across 15 most traded currency pairs from 3/1/2014 to 3/31/2015.

Game Plan: What Strategy Can I Use?

Trade forex with stops and limits set to a risk/reward ratio of 1:1 or higher.

Whenever you place a trade, make sure that you use a stop-loss order. Always make sure that your profit target is at least as far away from your entry price as your stop-loss is. You can certainly set your price target higher, and probably should aim for at least 1:1 regardless of strategy, potentially 2:1 or more in certain circumstances. Then you can choose the market direction correctly only half the time and still make money in your account.

The actual distance you place your stops and limits will depend on the conditions in the market at the time, such as volatility, currency pair, and where you see support and resistance. You can apply the same reward/risk ratio to any trade. If you have a stop level 40 pips away from entry, you should have a profit target 40 pips or more away. If you have a stop level 500 pips away, your profit target should be at least 500 pips away.

We will use this as a basis for further study on real trader behavior as we look to uncover the traits of successful traders.

*Data is drawn from FXCM Inc. accounts excluding Eligible Contract Participants, Clearing Accounts, Hong Kong, and Japan subsidiaries from 3/1/2014 to 3/31/2015.

View the next articles in the Traits of Successful Series:

The Traits of Successful Traders.

This article is a part of our Traits of Successful Traders series.

Over the past several months, The DailyFX Research team has been closely studying the trading trends of traders via a major FX broker. We have gone through an enormous number of statistics and anonymized trading records in order to answer one question: “What separates successful traders from unsuccessful traders?”. We have been using this unique resource to distill some of the “best practices” that successful traders follow, such as the best time of day, appropriate use of leverage, the best currency pairs, and more. Stay tuned for the next article in the Traits of Successful Traders Series.

Analysis prepared and written by David Rodriguez, Quantitative Strategist for DailyFX.

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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:

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.

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.

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:

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?”

Still looking for a profitable trading system ? I've tested 10+ systems. Only 3 were profitable! Learn more about my #1 recommended trading system, Day Trading Forex Live.

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10 Comments.

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

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 %

what is your suggestion?

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.

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 ration 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.