Which Kind Of Returns Do You Expect To Make From Forex Trading?

I want to make some money!

Ahhh. Of course, anybody who’s interested in forex trading certainly has ambitions of raking in some dough.

Trading involves risk, and we expect to be compensated for those risks.

There’s no doubt that every currency trader expects to make a profit.

The questions that you should ask yourself though are this:

What kind of returns do I expect to make? And how much risk am I willing to take to get these returns?

Your answer to these questions will play a huge role in determining what kind of trading style you will implement, what currency pairs and times you will trade, and most importantly, the risks involved in achieving your goals.

Let’s look at an example to help explain this better.

Mario and Luigi

Let’s say there are two forex traders, Mario and Luigi.

Luigi is looking to score 10% a year while Mario is a little more ambitious…

He wants to DOUBLE his account and make 100% returns!

And marry a super hawt princess.

As you can imagine, a trader like Mario, who is looking to double his account, is in a very different situation.

It is very likely that Mario will have to take a lot more trades and/or risk more than Luigi.

He will have to expose himself to more potential losses if he ever wants to achieve his goal of 100% returns.

Traders will also have to take into consideration drawdowns.

A drawdown is normally calculated as the distance from the highest value of your account to the next lowest point. (We’ll explain this a little bit more in a later lesson. For now, pay attention in class!)

Each forex trader must decide how big of a drawdown he or she can accept in order to hit their profit target goals.

On the one hand, there are forex traders who are risk-averse and would rather have small drawdowns. The tradeoff is that this will also limit potential profits.

On the other hand, there are forex traders who are comfortable with large drawdowns, just as long as their system also yields huge returns.

You will also have to take into consideration how much time you can dedicate to trading.

If you can’t dedicate a significant amount of time working on your trading system, reading up on the financial markets and learning new trading techniques, recording/reviewing your trade journal, then we can guarantee you that you will have a difficult time hitting your goals.

If you can’t make this time commitment, you may have to readjust your expectations as to how much you can make your account grow.

In the end, just know that success depends on YOU.

Do you have the discipline to GRIND it out consistently to tweak your skills and gain the experience needed to navigate the markets?

If you don’t, then expect inconsistent returns, if any at all, over the long term.

Reprinted from Babypips, the copyright all reserved by the original author.