The first thing you will hear whenever forex trading comes up is the rate of monthly returns. On the one hand, aspiring traders want to know if the activity is worth their time.

Also, they want to confirm whether what they heard before making a move towards forex trading is true or false. On the other hand, professional traders worry about returns because their life depends on it. In pursuit of more significant profits, an increasing number of traders are opting for algorithmic FX trading. They hope that the ability to preclude human emotions from trading will reduce mistakes and lead to higher profits.

To that end, professional traders are developing forex expert advisors at a furious rate to exploit their rising demand.

Unfortunately, some bad actors are taking advantage of the situation to offer bogus software with unrealistic monthly returns. Nonetheless, what a realistic monthly return in algo trading? To answer this question, there is a need first to shed light on some concepts. First, you need to understand what algo trading is all about. Secondly, you need a good idea about the level of risk that the algo trading system is exposed to.

With this in mind, it is possible to talk about realistic monthly returns. Algorithmic trading or algo , for short, is the case where a trader employs a computer to carry out trading decisions on his behalf. The algorithms that make the trading decisions are simply a set of instructions that tell the trading software what to do and at what time. Since the software strictly follows guidelines, it has the potential to earn astronomic returns. Unlike human traders, algorithms are not susceptible to psychological factors.

The ultimate manifestation of algorithmic trading is the forex robot. This software can stay active in the market for as long as possible. Today, traders are utilizing VPS for forex so that their bots can run trades even for a year without stopping. A virtual private server VPS acts as a virtual replica of your computer.

Therefore, you can have the VPS run your FX expert advisors , and your only task will be to adjust the parameters in the forex EA. Algorithms trade a super-high frequency. If the market is saturated with algos, they can create humongous levels of volatility. The excessive volatility hampers the liquidity of the market. As a result, the algorithms may begin to enter and exit wrong positions hence leading to a loss of money.

However, this continues to reduce, to the extent of loss-making as more algo activity hampers the liquidity in the market. Algorithms sometimes get faulty. In case this happens, and you fail to realize early, the system can blow your account in seconds. Therefore, you should ensure that your algo trading system is free of faults to ensure that you earn a reasonable return in a month.

Nonetheless, other factors are out of your control. For example, in a roiled global market, a slowdown in one market could wreak havoc in another market at the other end of the world.

It is because algorithms are highly integrated into the global forex market. From the foregoing, it is apparent that the monthly return from algo trading hugely varies due to many moving parts. Besides, different traders have different experiences with the algorithms that they use. The first step towards such returns is to cap your expectations in the realistic zone. Usually, unrealistic expectations have a significant impact on your trading behavior, even when using robots.

If a bot fails to give you the returns you expect, you are highly likely to pull it down. The thing is, you should never leave your automated forex trading system unattended. Always be on hand to adjust the algorithms based on the happenings in the global markets. Say, for instance, that you wake up today, and the British Pound has spiked because of a trade deal with the US.

Forex success stories are typically a source of excitement for beginner traders. When they get into the market for the first time, they consider these stories as examples of what monthly returns, they can attain in trading Forex.

However, that is not the way to think since those are most likely not realistic returns. Some of those traders have been trading for years before they have seen the success and huge monthly returns.

When a beginner trader starts their journey, they should only think about developing their skills and psychology. The money will come after. Moreover, everybody cannot have good returns when trading Forex.

It is a zero-sum game, which means if someone is making a profit, then the other person is losing it. Irrespective of how you look at this, the risk is just too high. One of the most popular approaches to keep the Forex income steady is to take it slow. There is no doubt that Forex millionaires have achieved what every Forex trader wishes to attain, but they must consider the risk factor as well. Most Forex millionaires became successful because they already had the resources to assist them.

Behind every Forex success story, there are many failures. That is why it is important to join a community of traders and receive mentorship. If you are interested, you can join our community. We will be able to provide you with the tools for you to succeed in this game. If you are interested in learning more about how to trade, visit PriceVisionAcademy.

com and join our community today! Financial markets are places, physical or virtual, where market participants buyers and sellers trade. Your email address will not be published. Save my name, email, and website in this browser for the next time I comment. Skip to content Price Vision Academy. Home Products Blog Affiliate Program Menu. Forex Trading. What Are the Realistic Monthly Returns in Forex Trading?

Price Vision Academy February 22, No Comments. One of the most popular approaches to keep the Forex income steady is to take it slow What to do for decent Forex returns? Below are some realistic returns that Forex traders can imagine: 1.

For most people who start day trading, the ultimate goal is to quit their job and be able to make a living off of the markets. There are two ways to make a living from day trading:. Whether you day trade stocks , forex, or futures, align your trading process around the tactics discussed below. With hard work and practice, over the course of six months to a year, you just may be able to become one of the few traders relative to those who try who make a living from day trading.

Before you can day trade for a living, know what you are up against. Day trading lures throngs of people, yet most of them won't make a profit, let alone a living. Most people who attempt day trading will lose most, or all, of the money they deposit into their trading account. Very few day traders will be able to make a living from day trading. The chance of making a great living is much smaller. For those who make a living from the markets, it typically takes them six months to a year—dedicating full-time hours about 30 to 40 hours per week to education, practice, and trading—before they reach that level.

Create or follow a strategy that allows you to keep these numbers in the target zones, and you can be a profitable trader. Successful trading can be reduced to four factors: risk on each trade position size , win rate, reward-to-risk, and how many trades you take. Understanding these four numbers will help you reach your goal of day trading for a living. To be successful, control the risk on each trade. Once you know your entry price and stop-loss level, calculate your position size how many shares, lots, or contracts you take in the stock market, forex market, or futures market.

One percent might not seem like a lot to risk, but winning trades should always be bigger than losing trades. A few winning trades and you have made that loss back. The reward-to-risk ratio is how much you make on winning trades relative to how much you lose on losing trades. That means you are making 1. To accomplish this, place a profit target that is a greater distance from your entry point than your stop loss is. That is a reward-to-risk ratio of 0. Reward-to-risk is interlinked with the win rate.

The win rate is how many trades you win, expressed as a percentage. Win rate is interlinked with reward-to-risk. Suppose you can maintain a 1.

You are adding 1. Do you see how win rate and reward-to-risk are linked? Alternatively, you could try to reduce risk slightly or increase your reward slightly to improve your reward-to-risk. Slight adjustments could push this break-even or losing strategy toward being a profitable one. If you can do that, the more trades you take that still allow you to maintain those statistics, the better. If you make one trade per day, that is about 21 trades per month. If you only trade a two-hour period —which is all that is needed to make a living from the markets this is the end result, and at the beginning, you will want to put in at least several hours per day of study and practice —you should be able to find between two and six trades each day that allow you to maintain the statistics mentioned above.

Note that some days produce no trades, because conditions aren't favorable, while other days may produce 10 trades. Don't take trades for the sake of taking trades though; that will not increase your profit. If you take trades with a poor probability of winning, or where the reward doesn't compensate for the risk, this will drag down your statistics, leading to a lower return or a loss.

If any of these statistics get out of whack, it will hurt your results. It's a razor-thin line between profitable trading and losing. Over trades, winning 50 means a nice income, while winning only 40 means you break even or lose money when accounting for commissions.

A slight drop in win rate or reward-to-risk can move you from profitable to unprofitable territory. Risking too much on each trade can decimate your account quickly if you hit a losing streak. Wins and losses are distributed randomly. Some days, you may lose all the trades you take, while other days, you may win them all. There is no specific number of trades you should, or need, to take each day.

The only way to know if a strategy can produce the numbers above or better is to test that strategy out in a demo account. Take hundreds of trades, and if the strategy produces the results above or better , then you have some assurance—but no guarantees—that the strategy can produce those figures in the future.

Small adjustments may be required over time to keep the strategy aligned with the numbers above. If a strategy produces those numbers, then only trade that strategy. The statistics above apply whether you trade stocks, forex, or futures —the main day-trading markets.

Your percentage returns will be similar in each if you create or follow a strategy that maintains the statistics above. Which market you choose shouldn't be based on return potential, as they all offer similar returns. Rather, base your decision on which market you are most interested in and the amount of starting capital you have. Your initial trading capital is a major determinant of your income.

Choose the market you are most interested in that allows you to trade with the capital you have available. The less capital you have, the longer it will take to build up your capital to a point where you can make a livable monthly income from it.

The more capital you have, though, the harder it becomes to maintain those returns. There is only so much buying and selling volume at any given moment; the more capital you have, the less likely it is that you will be able to utilize it all when you want to. This is typically why only individuals or very small hedge funds can generate huge yearly returns, yet these returns are unheard of when discussing traders or hedge funds with very large accounts. The main problem is that while you can see that the math works over 10 or trades, while you are in a trade, it is very hard to remember the big picture.

Most new traders can't stand losing , and so they exit a winning trade with a tiny profit, messing up their reward-to-risk. That also messes up the reward-to-risk ratio and could potentially decimate their account. New traders also need to remember that wins and losses are not evenly distributed.

You may win or lose several trades in a row. A winning streak doesn't mean you are a phenomenal trader and can abandon your strategy. Likewise, a losing streak doesn't mean you are a bad trader. The only thing that matters is how many trades you win and lose out of , which is about how many trades you will take each month.

Win more than 50 with a reward to risk of 1. Make hundreds of day trades in a demo account using the same strategy to see the win rate, reward-to-risk ratio, and number of trades per day it produces. Only utilize real capital once you have hundreds of trades' worth of data and the strategy is showing a profit over those hundreds of trades.

The Bureau of Labor Statistics categorizes all traders under the umbrella term of "securities, commodity contracts, and financial investment sales agents. However, many people who try day trading lose money and never become profitable. There are usually just over trading days in the year, but the exact number varies.

In both and , there are scheduled trading days. A pattern day trader is defined by federal law as someone who day trades on the stock market at least four times every five trading days. New York Stock Exchange. In This Article View All. In This Article. Day Trading Success and How Long It Takes. Capital at Risk per Trade. Win Rate. Which Market To Day Trade. The Bottom Line. Frequently Asked Questions FAQs. Key Takeaways Whether you day trade stocks, forex, or futures, align your trading process around these tactics.

Successful trading can be reduced to four factors: risk on each trade position size , win rate, reward-to-risk, and number of trades. Make hundreds of trades in a demo account to see the win rate, reward-versus-risk, and number of trades per day it produces. After success in the demo account, you can move to trading with real capital. How much do day traders make per year? How many trading days are there in a year? What is a pattern day trader?

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Best Managed Accounts Best IRA Accounts Best Forex Brokers Best Forex Robots Best Saving Accounts Best Stock Brokers Best Crypto Platforms. We've all heard stories of a person who perhaps came from a lower-class background, who began trading and was able to achieve success, earning millions in the process. What is Forex Industry. in Forex Trading , Investing , Passive Income. The same principles apply to trading. Tell us why! To make that happen you need to find out what is possible to have as a monthly return.

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