How Much Money Can You Make Trading Forex?
This weekís question comes from Martin, who asks:
How much money can I make per month trading Forex?
Admit it, this is one of the first questions you asked when you entered the Forex market.
Thereís no shame in it. I certainly wanted to know how much I could make when I started with equities in 2002.
The thing is, itís a slippery slope.
Curiosity is natural. While thereís no harm in asking questions, the answer you receiveóand whether or not you dwell on itócan have serious consequences.
In todayís post weíre going to discuss how much is too much profit, the proper time horizon for measuring returns, and an alternative method that has served me well.
Ready to do this? Letís go!
Forget What Youíve Been Told (or Sold)
Has someone ever tried to convince you to buy their trading system that promises 10% profit per month?
How about 20% or 30% every month?
If you have, feel free to a leave a comment below. I would love to hear from you.
In case youíre one of those traders and are still confused about the earning potential in the Forex market, forget what youíve learned thus far.
There are no guarantees in this business, only possibilities and probabilities.
No matter how good you are, you wonít make 30%, 20% or even 10% profit every month.
Sure, youíll have a great month now and then, but sustaining those types of gains is not realistic. In my opinion, the people using these kinds of profits as a selling mechanism give this business a bad name.
Sometimes in order to move forward, you have to forget what you think you know. This is one of those situations.
The business of trading is a marathon, not a sprint. Itís a slow incremental process that requires a ton of discipline to succeed, and you canít have massive profits without the associated risks.
So when someone offers you a system that produces 30% profit every month, they are handing you a ticking time bomb.
This brings me to an extremely effective, but somewhat unconventional, way of thinking about earning potential.
Put the Trading Process Before Profits
If you want to become a consistently profitable trader, you must focus on the process first. I canít stress this enough.
No trader has ever become successful by focusing solely on how much money he or she can make each month.
In fact, many traders donít even have such a goal.
Iím more concerned with how much money I might lose in a given month than how much I can make. I know that if I protect my capital and follow the process Iíve laid out for myself, profits will follow.
Thatís the key here. A race car driver doesnít hop into their car and focus on nothing but winning the race.
Sure, thatís the goal and it inevitably crosses their mind, but their focus is primarily on details like when to brake, how early or late to take each turn, and when to punch the accelerator.
They know that itís the small things that make the difference. If they adhere to the process of good driving that theyíve practiced for years, the win is all but guaranteed.
Trading is no different. Focusing on making 50% profit per month wonít make you a dime. It will, however, put you out of business in a hurry.
Just like the race car driver, you should focus on the trading process.
Keep your bets small, wait for quality setups and donít trade the news. These are a few of the steps of this process that you should focus on.
Do these things well consistently and the profits will find you.
If You Must Aim for a Monetary Goal.
I get it, striving to master a process isnít appealing to a lot of people.
Personally, I enjoy it. But then Iíve always been a process-oriented person.
If you must set a monetary goal, here are a couple of ideas to consider:
Keep it conservative.
You arenít going to make 30% profit every month. If youíre keeping your bets small, which you should, then your gains will also be relatively small.
But thatís a good thing. Thereís nothing wrong with aiming for just 2% to 5% each month. In fact, I think thatís a good place to be.
This isnít a goal you want to knock out of the park. If youíre aiming for 5% profit per month and you make 40% instead, chances are you over-traded or overleveraged your account, or both.
Neither of these are habits you want to feed.
Make it a monthly goal or higher.
The problem with weekly and daily goals is that you arenít giving yourself enough time.
You may only get five to ten quality setups each month if trading the daily time frame. With just one to two setups each week, you canít possibly measure a return in one day or even one week.
You could also set quarterly and yearly targets. Just remember that the process required to achieve those profits is far more important than the money itself.
See this post for more on goal setting.
In the Long Run
The amount you can earn from Forex over the long run is nearly limitless. With approximately $5 trillion exchanged every day, entering and exiting the market with millions on the line isnít even a blip on the radar.
I suspect thatís the problem right there. Everyone is in a hurry to get a piece of the $5 trillion pie.
Hereís the thing, thoughÖ
The market favors the disciplined. Those who have the patience to wait for quality setups and never take excessive risks get rewarded for their prudence.
Start treating your $100 account as if it were $100,000. Heck, write it as $1 million if you have to; whatever it takes to avoid the temptation to double your account every month.
After all, 2% to 5% of $100,000 is $2,000 to $5,000 of profit each month.
And with a $1 million account, itís $20,000 to $50,000 per month.
Of course, those are just hypotheticals. You will always have good and bad months no matter how much experience you acquire.
Figures like these may seem unthinkable to some. But many of the multi-millionaire traders we read about started with far less.
Bill Lipschutz, one of the best currency traders of all time started with $12,000.
Ed Seykota began his trading career with just $5,000, and Randy McKay could only scrape together $2,000 to start trading.
All three grew their accounts into millions of dollars despite starting with a relatively small amount of capital.
If you want to separate yourself from the 90% (probably closer to 95% in my opinion) of traders who lose money consistently, you have to think differently.
Most Forex traders overtrade and overleverage their accounts in an attempt to make 30% profit or more every month.
So to be in the top 5% to 10% of traders, you have to do the opposite. You have to put more focus on how much money you could lose rather than how much you can make.
Remember, a trading edge is far more than just a strategy. Anyone can learn to trade price action or swing trade and utilize the various strategies of each. Thatís nothing special.
An edge is the entire process from start to finish. Itís anything that separates you from the crowd.
So start thinking long-term. You can grow your account from where it is today into a fortune, but itís going to take years, not weeks or even months.
Thatís precisely what the likes of Bill Lipschutz, Ed Seykota and Randy McKay did to achieve greatness.
Trading any market successfully is a long-term endeavor. It takes years, not months or weeks, to become consistently profitable.
Armed with that information, it becomes much easier to take things slowly. Keep bets small and focus on quality setups, rather than attempting to trade every day.
If someone claims their trading strategy or system earns 30% or 40% every month, run and donít look back. While such profits are possible, they arenít sustainable and will likely lead to a blown account.
I learned years ago that itís far better to focus on the trading process. That includes things like risk management, having the patience to wait for quality setups and drawing accurate levels among other things.
As long as you master the process of trading well, the profits will follow. In other words, let the money you earn from Forex become the byproduct rather than making it your motive.
If you must aim for a specific monetary figure, make it a conservative one. Donít make the mistake of shooting for 30% or 40% profit per month.
A goal somewhere between 5% to 15% per quarter is reasonable yet still quite attractive, especially for those with larger accounts.
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Your Turn: Ask Justin Anything
Iíd love for this new weekly Q&A to be successful and provide an invaluable repository of answers to common Forex questions.
To do that, I need your help.
Hereís what you can do to get involved and have your question answered in next weekís post:
- Ask questions. Post them in the comments below or Tweet them to me @JustinBennettFX
- Help me answer questions. If I missed something or if you have something to add, donít hesitate to leave a comment below.
I partially disagree with ĒNo matter how good you are, you wonít make 30%, 20% or even 10% profit every monthĒ. It depends on your trading pattern and consistency. There are moths youíll even 50-60% depending on market volatility. I agree partially cod if u are a scalper youíll definitely lose
Iím open to disagreements, but Iíve never come across a trader who made 10% or more profit EVERY month, and Iíve studied dozens of them.
The key word there (and in the article) is ďeveryĒ month.
I think daytraders can make 10% per month, donít you think so? I suppose your post is about swing traders.
It applies to every trader. Iíve made more than 10% in a single month, but it isnít going to happen every month. Thatís my point.
The point is, there is not fixed return in a month. There is no GUARANTEE that you can make 10%, 20% or 30% just like the promises of some people who are selling signals. This is on the assumption that you did not over-risk, meaning, you did not risked more than 10% of your capital on a single trade, this is on a presumption that your risk is only at least 2%.
I have nothing to say.. It is too useful for me.. Thz u sir.
This is Quite an information. Thank alot. My name is Franck and my question is, what is your take on binary options? Is it profitable? Can I make money out of binary options? If No, why.
Hi Frank, I might write about this one. Personally, I dislike binary options. Too much fraudulent activity concerning brokers. Plus youíre adding a time horizon for each trade which must also be correct.
What u are saying it is true bcuz since I have been in trading industry I have never make consistent profit buzzy over trading i read everything that u are posting i like to say thank
sir great article i loved it.i resd ur every post i want to be a member but the price is quite high please do some favour for small traders like me
that question of a newbie was well answered
Appreciated, but I wouldnít call this a ďnewbieĒ question. I know traders with several years of experience who are still making some of the mistakes I outlined above.
sir,i want$100 for trading inyour forexa/c
My account got blown last week as I was promised 80% to 100% profit by a robot,with GBPUSD.
I do not get people how you believe about those big profits. So if you make this amouts of profit, then imaging how quickly would grow those who have millions. You have million. After months you have 2 millions. Then 4. then 8, etc. so after a year you would have about 500 millions ?? in just one year ??
And then thrilion and after year 500 trilions ??
Many of these prey on newbies who come to the forex market and do not know how difficult it really is to make money.
I HAVE NOTHING TO ADD OR ARGUE ABOUT BECAUSE ALL YOU SAID ARE FACTS.
THANKS FOR THIS PRECIOUS ARTICLE.
You are 100% correct. here is my own question, is it advisable to trade the martingale way? Trading it with the best setups that has the potential of bringing in 200pips while risking about 25pips.
Thanks for the question. Iíll add it to the list.
In the meantime, anything that uses martingale is a ticking time bomb. Youíd be better off burning your money to stay warm during the winter.
Thanks you to signal for me
Justin I really appreciate all your advice thus far, right now I am just starting out, Iíve gotten my feet wetÖ.but let me ask youÖ.What do you think about NADEX?
Hi Ben, pleased to hear youíre enjoying the content.
See my response to Frank above. Iím not a fan of binaries.
This is totally off the subject but I saw your course offered above and just saw an example yesterday on the USD/CHF as an example, People frequently say they canít trade Pin bars because the canít find enough of them. Maybe this will help some. Look for long double bars. A double bar is a pin bar formed over 2 periods rather than one. Starts at one price one dayĖmoves a good distanceĖstarts at that price the next period and goes back to the price it started the previous period. On Fridayís close look at a 12h and a 6h chart.
Also people frequently wonder why pin bars are so profitable. ďI THINKĒ it is because they are ďfrequentlyĒ a result of those in power
running the stops to build up their capital. Think about itĖwhere are the best pin barsĖat support or resistance areas. Where do many traders place their stopsĖthey try to hide them below/above resistance areas. The bigs know thisĖthey run the price through the resistance area, knock out the stops, then move the price in the direction they intended in the first place.
Interesting to see what happens here.
You have said it all. This is an eye opener to me. Thanks a million times.
i dont understand the Ē double barĒ part
You stated the obvious rules that govern fx market. But I have following observations;
1. Trading news is at oneís discretion as against your directive. One can trade news successfully with good strategy and good broker. Trading news is very profitable when traded very well.
2. ďThe cost of Justinís course was minuscule compared to the return, to put it in traders terms my ROI (return on investment) as of today is 8,900% and that is not a joke. Thank you again Justin, you changed everything for meĒ
That was a claim made by Ted H, one of your paid members. Though he didnt state the period he made the ROI but I doubt if he could make such return with 2% to 5% profit every month.
This entire website is a collection of my opinions on various topics. When I say to avoid trading the news, it too is my opinion. If youíve found a profitable way to trade the news, go for it.
As for Tedís comment, youíll have to ask him; itís his quote. But just like my remark above, those figures of 2% to 5% are my opinion. It doesnít mean youíre wrong if you choose to go your own way.
Sir you confuse me. You suggest a higher timeframe, what to do if news comes and you are in trade?
Thank you for the excellent advice and suggestions. Really appreciate it.
Once again you nailed it. I am a member of your community and it cost me 40% of my trading account but itís for life and I know by following your coaching it will be paid off just a matter of time. I have only been trading for about 3 months I was introduced by a family member who turns out to be a very aggressive trader but you only heard about his wins not loses. Anyway I was hooked and then I found Forex Factory where there was an article from you and after reading it I was a member within hours. I changed my broker to your preferred broker and was able to download the Metatrader4 platform and itís just been great. Only in the last week or 2 have I started to make very small profits mainly because I have strict rules around protecting my capital. In fact so strict I have yet to reach any of my targets. Maybe I need to slacken off I donít know but at least I can now see profits and I donít CARE how big or small they are. Also after exploring the MT4 platform and Forex Factory I see a lot of SNAKE OIL.
Thanks so much for all of your posts and I enjoy going on this site every day I reckon you must of cloned yourself because there is no way one person can do all what you do. Please keep up the good work and live forever.
I am agree. Trading is a process
hola amigo .hace meses que leo tus informes diarios como semanales he aprendido no mucho pero lo hago con mucha paciencia . todavia lo hago en demo . soy argentino aca no hay medios confiables para depositar y tener el retorno . para aca tu estrategia nos cuesta muy caro aprovechamos tus informes gratis .ejecuto cuando se presenta esa oportunidad de tu estrtegia . me interesa aprender y estar preparado para cuando en mi pais se abra m,as el juego para el forex . muchas gracias . saludos . Ruben
I started trading forex October 2017. I have lost much money. I set out to make profit but lost so much. I need help.
Reach out I could assist
Comfort, take it easy.Go for knowledge, go and read, go and do paper trade for few weeks to months, before you go live. Join forex groups. Ask more questions. Praclick, practice and practice more. Donít be in haste to trade live until you understand how painful you can loose your hard earned dollars
Can anyone make a living trading the markets. Can you take trading as a fulltime engagement rather than a hobby or a part time endeavour?
As a trader for 7 years who has lost money due to wrong expectations, the advice to keep my bets small, wait for quality setups and donít trade the news is very important. Thanks Justin
Thanks a lot. For last two month, I could not make any good setup in my treading. From your todayís article, Iív got some inspiration.
I love your blogpost. I have a question. Between Stock Market and Forex Trading, which is better to invest in?
The post is very enlightening, I like that.
Nothing to add.
I donít wanna disgrace anyone here, but to be very honest, what Justin wrote is the ĎFACTí, Believe It Or Not. Everyday I get many emails or even calls from many, including Market Traders Institute, Nicola Delic and many more. In reality, they are busy selling their products that donít actually work. Can anyone here tell us about any specific system that could ever earn 20%, 30% per month? It is unrealistic. Even if I am lucky to earn 30% in month, the next month I am not able to earn even 2%. Sometimes, I lose what I gained last month.
Justin is the only Coach in this industry I have ever seen, who teaches you 2 most inevitable things: 1. The art of Trading, (how to trade on your own) and 2. Love your money, (minimizing losses will ultimately increase your account).
Thanks for this post, Justin. Given the way you emphasize this Trading Process in many of your posts, could you expatiate it. For those of us who want to follow it, What is a Trading Process?
This is probably the first question I asked myself.
This article was useful to me.
account blown few time over various system ?? im a consistent loser ?? i think i have spend more than 10k usd into system + account. broker and system seller are happy ??
Iím sorry to hear that. Look at all articles on this site. It just might turn your trading around.
Sad to hear that
I assimilated every bit of it.
Thanks also for your daily trading signals.
un trader debe esperar solo un 6% de ganancias de promedio mensuales de su capital y si lo combinamos con intereses compuestos, estariamos duplicando la cuenta en un ano. (paciencia y poca ambicionÖ. )
Hi guys which forex broker do you recommend?
Thanks alot Justin for your knowledge.
I was thinking myself if its possible to loose 100% for even a week when you are dummy, how comes to be impossible to be profited 100% for a month when you become a pro? Iím a newbie, what I think is that the trade I loose, some one who trade the same trade but in opposite will profit, if not what is the secret behind trading?
Damn I must be a god then XD
Yay every one is godawful but me.
Sure as hell ainít selling my method hehehe
The first and most important broker selection factor one should consider is regulation.
The excitement of binary options trade can disappear as soon as you learn what is expected of you. You have to learn trading strategies, decide what assets to trade on and which broker to use. It is a lot of work but when you start making money, you will forget about the struggle. If you decide to trade in Forex
Thank you Thank you Thank you, such divine albeit rare wisdom
I am a victim of a binary scam I was burned by a bogus broker recently it was difficult to get a withdrawal. I had to hire a recovery company to get my funds back. infojackie04atgmaildotcom
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