Tag: average

How Much Money You Can Make In Forex Trading?

3 min read

Are you tired of being scammed, fake script?

Do you wanna earn?

But you want secret strategy 100% working, real and very legit.
Yeah!

How much money you can make?

Can you become a millionaire through Forex trading?

Well, the answer is YES and NO.

I am not saying that it is impossible to make millions with Forex. It is.

But if you want to turn a $500 or even a $5000 account into millions, then I have to tell you that you will have a hard task.

Yes, I know. You’ve heard of traders making millions in the financial markets.

But it is not good to compare yourself with them.

Why is that?

Because you’ve got different account size, risk affinity, risk management, trading strategy, and etc.

So is it possible to get rich trading forex? Absolutely!

But you need to keep some things in mind before you try it. Many people want to get rich trading forex and there is no doubt it offers the potential to do so but most fail. Forex trading is risky we know that already but with risk goes reward. If I want to explain how much money can you make from forex trading I have to do it with objective measures.

Just statistics, numbers, and the cold hard truth.

Are you ready?

In your trading the most important thing is metric. If you only win 20% of the time and you can have a 1 to 2 risk to reward on your trades, you will be a consistent loser.

It is obviously your risk to reward isn’t the answer. What else can be? Your win rate maybe?

Let’s see.

You have a 90% win rate but if you lose $0.95 for every dollar you risk, you will also be a constant loser.

So, where is the catch?

Your risk to reward and win rate is meaningless on its own. You must combine both your win rate and risk to reward to establish your profitability in the long run.

This is known as your expectancy. That will give you an expected return on every dollar you risk.

Mathematically it can be expressed as:

E= [1+ (W/L)] x P – 1
NOTE:
W means the size of your average wins
L means the size of your average loss
P means winning rate

You have made 10 trades, 6 were winning and 4 were losing trades. That leads you to your percentage win ratio is 6/10 or 60%.

If your six trades brought you a profit of $6,000, then your average win is $6,000/6 = $1,000. If your losses were $3,200, then your average loss is $3,200/4 = $600.

Apply these to the expectancy formula:

E= [1+ (1 000/800)] x 0.6 – 1 = 0.35 or 35%.

This means, the expectancy of your trading strategy is 35% and your trading strategy will return 35 cents for every dollar traded over the long term.

On the other hand, most of the casinos work 24 hours a day, 365 days a year.

The reason is the more they play, the more they make. And it’s the same for trading. You must PLAY more to WIN more.

The frequency of your trades matter.

However, the more trades you put on, the more money you will make (while having a positive expectancy).

Let’s see how important this is.

You have a forex trading strategy that wins 70% of the time, with an average of 1 to 3 risk to reward.

But it only has 2 trading signals a year.

How much money can you make from this forex trading strategy?

Not a lot, am I right?

Well, you might even lose in that year since there’s a 9% chance of losing two trades in a row.

As you can see the frequency of your trades is important but it’s not enough to determine how much money you can make in forex trading.

There are a few more factors that play a crucial role.

I’m sure you heard a lot of stories where a trader took a small account and trade it into millions within a short time. But you have to know that for every trader that attempts it, thousands of other traders blast their account.

Let’s not treat trading as get – a – rich – quick – scheme. Treat it as a business you’re looking to grow it constantly over time.

Let’s say that can result in 20% a year (on average).

If your account is a $1000 you’re looking at an average of $200 per year.

Your account is a $1m, you’re looking at an average of $200,000 per year.

Or your account is a $10m, you’re looking at an average of $2,000,000 per year.

Let’s say it is the same strategy, same risk management, and same the trader. The capital of your trading account is the only difference.

No matter what strategy or system you’re using, the bottom line is you need money to make money in this business. Period!

Because your bet size determines how much you can make.

How?

The bigger you risk, the higher your returns.

Let’s say your trading strategy has a positive expectancy and trigger a return of 20R per year. And you have a $100,000 trading account.

How much can you make from your trading?

This depends on how much you’re risking per trade.

If you risk $1000, you can make an average of $20,000 per year.
Or if you risk $3000, you can make an average of $60,000 per year.
And if you risk $5000, you can make an average of $100,000 per year.

This is the same strategy, same account size, and same the trader.

The only difference is your bet size (or risk per trade).

But…

If your bet size is too large, the risk of screw up becomes a real possibility. That is to say, you have a higher risk of detonating your trading account and it will reduce your expected value.

So, how much money can you make from Forex Trading?

However, it depends do you withdraw or compound your returns.

If you make an average of 20% a year with a $10,000 account, after 20 years you will have $383,376.00.

But if you withdraw 50% of your profits each year you will make an average of 10% a year and after 20 years you will have $67,275.00 on your account.

So, It is clear enough that compounding your returns will generate the highest return.

But is it workable or not depends on how you manage your trading business.

OK, you’ve learned the main factors that define how much money can you make from forex trading.

Now, let’s see how to use this knowledge and figure your potential earnings.

Example:

Trading expectancy – 0.2 (or 20%)
Trading frequency – 200 trades per year
Account size – $10,000
Bet size – $100
Withdrawal – None

Now implement this formula: Trading expectancy * Trade frequency * Bet size.

And you will get:

0.2 * $100 * $200 = $4000

You see?

To sum up, you can expect to make an average of 40% a year.

And the answer is, there’s no one factor that determines how much money you can make in forex trading.

You must look at these 5 and monitor and assess the success or failure of various processes
1. Trading expectancy
2. Trading frequency
3. Account size
4. Bet size
5. Withdrawals

Then implement formula: Trading expectancy * Trade frequency * Bet size.

In this way, you will have an objective measure of how much money you can make in forex trading.

Read this too: Best Forex Brokers UK FCA Regulated

Risk Disclosure (read carefully!)

31st July 2018
Easy Ways To Start Investing With Little Money

1 min read

Despite the title, I tell you that there is no big and small money.

Money is money and it’s yours. A different question is whether you have enough to invest. For investing with little money, I mean.

If you want to invest you can’t do it without money.

Is there any way to reach decent money for investment?

Well, my friend was putting away just $15 per week. In order to avoid tempted to take the money for saving, he put the box reserved for saving money in his girlfriend house.

Uh, how she was strict and strong. But he stashed the savings away in a safe place. You may think it isn’t a lot, but at the end of the year, he had $780.

It was still not enough but it was a great beginning.

To make money in the stock market, you have to start with big money, right? Oh, no! Totally wrong!

My friend started investing with little money.

You can try with day trading, why not. It is investing with little money.

But it takes bravery and strength of character. You have to understand the different market forces at play. This isn’t for dilettantes or dabblers.

But it is a way where you can very quickly make a major amount of money with a relatively small investment. Real investing with little money.

Day trading is not for you if you don’t have any guts.

Don’t worry, there are ways to hedge your bets when you are playing the stock market. But you have to learn and learn and learn. I suggest you ensure set stop-loss limits to cut any potential for accelerated depreciation.

If you’re an advanced trader, you probably understand that market makers move stocks to play into our greed or fear of failure. It isn’t rare they push a stock down to a certain price to enhance our fear and play right into their pockets. And pay attention to averages. When stocks break moving averages, there’s potential for large upside or big downside.

You can be investing with little money in commodities.

Gold, silver, metals, energy. Silver looks like the solid hedge on inflation. That kind of commodities is the tangible property that people can hold onto. Investing in commodities means investing in futures contracts, prearranged agreement to buy a particular quantity at a particular price in the future. These are leveraged contracts, providing a big upside and a large downside. I suggest you be extremely careful.

And of course, you can trade cryptocurrencies. Trading them might seem risky, if you hedge your investment, you could limit some fallouts. There are plenty of platforms for trading cryptocurrencies. But before you step into this, educate yourself. Use some free demo account for several months and learn, test your skills, get more knowledge.

For novice traders, it is difficult to distinguish valuable and useless trading. You need to avoid any new coins until they show up well on the market.

No matter how much you want to invest with little money.

Markets are very volatile in the altcoin scene.

There is also such a thing as “compulsive trading”. It’s hard to learn the trading style from the first day. Errors will have to occur until you find a rhythm that suits your needs. The best advice is to start with investing with little money of one or two coins that look legitimate and potentially profitable.

More about The 5 Most Common Mistakes Made By Beginners In Trading Cryptos.

Everyone who wants to invest on the market should first evaluate his own preference for risk. Also, it is necessary to have at least minimum economic and financial knowledge and ability of common sense reasoning.

The economic revolution is afoot and you can either be a part of it or get left on the side of the highway feeling dumb.

Everything is up to you. Even your investments. So, start investing with little money and follow the rules.

Be smart and good luck!

Risk Disclosure (read carefully!)

19th July 2018