What You Can Realistically Expect To Make in Average Monthly Return as a Forex Trader?

Written by Karen Bryan

If you’re trading in Forex, you’re most likely doing so to make money. Yes, there are other advantages. You’ll learn about global economies, improve your status as a trader, and learn more about trading in general. But money talks, and you’re likely wondering how much you can expect to make in average monthly Forex returns.

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It is vital for all new (and seasoned) traders to have a realistic idea of how much they should be making. If you set unrealistic targets, you’ll either be disappointed, or make big mistakes trying to get there and probably lose your investments.

That said, what returns are realistic to expect from Forex trading?

Look for % Returns

There are many websites out there presenting claims of returns that sound too good to be true. All of these are too good to be true. Usually they’ll tell you about how much money you’ll earn in currency values.

For example, they attempt to lure you with promises or $10,000 per month. A surefire way to identify false claims is that Forex returns are measured in % values, not currency. While it is possible to achieve high Forex returns, you should not be expecting specific currency figures.

It Can Be a Risky Business

While the Forex market is large and very accessible, it is important to remember that currency trading involves high volatility. Any potential returns are equal to the risks involved. It is easy to obtain high leverage when trading currency, which allows you to gain huge profits quickly, but you’re just as likely to lose that much.

For this reason, you should always identify your risk profile: how much you can afford to risk, and what will take you out of the market completely. The highest acceptable risk for beginners is 2% of your capital per trade.

In order to get acquainted with the risk/return ratio for leveraged instruments it is highly advised for a rookie trader to first open a forex demo account and practice trading with virtual money before depositing live cash.

What Forex Returns to Look For

There is no one answer to the question of what returns you should be looking for. The answer will be personalised to you, as it strongly depends on your trading strategy and risk profile. Some traders will be looking for high returns, while others will be happy with small but steady gains. A general rule is not to aim for profits larger than 5% a month. Although you’re likely risking 2% of your capital, you cannot expect returns on every trade.

Trader’s Profile

Unsurprisingly, the returns you can expect will largely depend on your profile as a trader. A rookie should expect far less than a seasoned pro. In general, traders could expect the following returns:

Rookie Traders

As a rookie trader, you want to achieve profits as soon as possible. But you should not expect any profits immediately. While you may make profits, the important expectation from the stage of your trading career is experience in the market. Try to learn as much by lasting as long as possible before you lose your initial capital.

Experienced Traders

Once you have experience from losing your first or second deposit, you can start to expect to achieve returns. You could aim for at least 1% monthly, but don’t expect more than 5%, as unrealistic expectations may lead you to blow your capital again.

Professional Traders

As a pro, you have a strategy that has been tried and tested. Only now can you start aiming for returns in dollar values. With your experience, you may well be planning to make trading your main source of income. If you were able to make 4% on your Forex monthly returns, and if you wanted to live on this, your trading capital should be at least US$100,000. This would give you around US$3,000 per month to cover your living expenses, and put the remaining US$1,000 per month aside to cover one of more losing months.

Now that you have an idea of what your average monthly Forex returns could equal, go into trading with realistic goals.