When it comes to returns, Forex trading profits are unrivaled.
The reason is the nature of the markets, which can either make you one of the richest in the world or one of the poorest. Of course, gaining immense amounts of capital in a short time is possible, but the smaller the account, the less the chances of doing so.
We hear stories of that one kid from a lower class family that started trading and in a short amount of time made millions. These stories are heart-warming and inspirational, but usually always due to superhuman focus on daily learning and trading till all that work pays off
There is also another type of story. The story of the guy who made millions trading a few days, then lost everything because he was convinced he had found the holy grail—when in fact, he was just lucky at the beginning.
I don't blame people for making this rookie mistake either. Without proper trading principals, failing is easy.
When I started trading, the stars aligned for me as well and I made several thousand from a 500 US dollar account, then lost everything the next day. In fact, I think we have all been there—it's just part of the everyday life of a Forex trader.
But you can't be lucky all the time, unfortunately. We cannot expect that the stars will always align in our favour. It is important to understand that in spite of luck being a welcomed factor, it's not a reliable one.
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The simplest way to answer this, is to consider what you would do with your own company. When you decide to start a company, you do not just invest in the first idea you hear about, right? You shop around and consider various options, because you know that a fool and his money are soon parted.
And once you're running your business, you probably won't just go with the flow of things either. To make your firm work properly, you need to plan, set targets, check progress and make budgets.
The same principles apply in trading. As with fulfilling your life goals, meeting your Forex goals requires you to apply yourself with effort, focus and determination.
As Vince Lombardi said, "the only place success comes before work is in the dictionary". When you google something like Forex monthly return, you may stumble into some account statements or claim results of people making millions per hour.
But with every story that seems to be too good, there is usually a catch.
No system can make millions with a small account. For example, that story you hear about a Wall Street guy making 10 million USD a year may be true.
But what the story may not mention is that he manages billions of USD. Those 10 million USD are less than one percent of the total account that he manages. Compared to a small 1000 USD account, it is a return of just 10 USD a year.
You never know, you might be the next George Soros. Give it a try in a risk free environment.
Most news just does not make that fact evident, so ordinary people get the wrong impression.
So back to my previous comment about the great results when using Google. It's important to note that some of those significant achievements are fake and some are real.
The real actual results are very rare. If you doubt the rarity of successful large scale Wall Street trades, then ask yourself how many times you have seen a Wall Street trader publicly display his or her results?
Of course there are exceptions, but 90 percent of the big fishes won't share because they aren't performing at that level. But there are a lot of people who are open to showing their accounts and many Forex brokers who choose to share these results. Don't differentiate between results achieved via luck or skill.
As said above it is very rare to see a real pro parading his average Forex returns. A very high percentage of the guys who have luck, lose everything faster than they were able to gain it.
And do not get me wrong. I am not talking about people who work their asses off and get a lucky break. I'm referring to newbies who have no idea what they are doing or misguided and base their decisions on emotions.
There are a lot of traders that believe a combination of proper capital management and correct strategy application, can make money. And most of them do.
But most can also afford to lose big from time to time, because they have enough funds to carry them over to the next win. For the majority of professional traders—the guys from Wall Street, the money managers and retail traders—the average Forex monthly return is 1 to 10 percent per month.