What are Realistic Profit Targets for a Successful Trader?

Realistic Trading Profits

Keep in mind that using cutoffs, as explained in this article, does not work for every trader. Some systems require you to take every setup that comes along, whether you’re up or down, in order to take advantage of the edge that the system provides.

Each trader has their own level of risk tolerance and desired daily, weekly and monthly profit targets.  Many successful traders use daily, weekly, monthly and even yearly cutoffs.

New traders shouldn’t concern themselves with profit goals but instead, focus on consistency.  That being said, what are some realistic profit goals for a successful Forex trader?

Setting Realistic Profit Targets in Trading

It all starts with setting realistic daily goals. Swing traders might start with weekly goals for obvious reasons. It is important to set your goals in actual profits, as opposed to pips.

It is also important to use the same amount of risk (exposure) on every trade.  Varying exposure is a good way to wipe out your account – even if you’re using a solid trading system.

Realistic Profit Targets are Important

Daily Goals

Daily goals are largely determined by your level of risk tolerance.  For instance, I risk 1% per trade.  My daily profit cutoff is 2%, so I only need one or two successful trades with no losses to hit that mark.

If you are only risking .5% per trade, a more realistic daily profit cutoff might be 1% per day. Shooting for 2%, while risking .5%, would take two to four successful trades with no losses to achieve. In other words, it’s not likely to happen.

Note: Don’t just jump into the market. Learn a good trading system, and then backtest and demo trade until you prove to yourself that you can be consistent in the long run (months or years – not days or weeks).

When you start trading a live account, use the smallest lot size (or number of shares, contracts, etc…) available to you at first. Gradually increase your exposure per trade to your desired risk level as you become accustomed to the psychological hurdles of trading real money.

I am comfortable risking 1% per trade.  Most successful traders would recommend using .5 – 2% per trade.  Very advanced traders often risk 3% or more per trade. How much money are you willing to lose per trade?  Once you have determined your personal level of risk tolerance, you can determine a daily goal or cutoff.

Smart Trading = Realistic Profit Targets

Weekly and Monthly Goals

From there, your weekly and monthly cutoffs can be set.  I have a more aggressive risk tolerance, so my profit cutoff targets are as follows: 2% daily, 5% weekly and 15% monthly.  I don’t use yearly cutoffs.

These targets may seem high to some traders, but they are realistic for me.

Note: This does not mean that I make 2% every day, 5% every week, etc….  If I make 2% in a day, that’s a good day of trading. Likewise, 5% is a good week of trading.

If you are not consistent yet, you should focus on learning a profitable trading system and becoming a long-term, consistently profitable trader. If you’re just starting out, shooting for 5% per month makes much more sense.

If you think that you can double your account every few months in trading, you are not likely to set realistic profit targets. You will likely overtrade your way to a smaller account balance.

You will risk too much, and you will lose too much. Greed causes traders to be overconfident and overactive in the market, which leads to mistakes. Small consistent and compounded profits will lead to a fortune in the long run.

Remember: Money management cutoffs work both ways. If I am down 2% in one day (or two losses in a row), I stop trading that day. I stop trading if I lose 3% in one week. Lastly, I use 5% as my monthly losses cutoff. Keep in mind that I have a more aggressive risk tolerance.

The Importance of Setting Realistic Profit Targets

In my opinion, money management skills are the most important aspect of achieving long-term profitability.  I never made any consistent profits in the Forex market until I learned how to manage my risk.

Setting realistic profit targets is an important part of good money management, and setting the maximum amount you are willing to lose per day, week, and month is equally as important.

Another aspect of good money management is risking a small percentage (.5 – 1% or less) of your total account balance per trade.  Depending on your trading style, you should also only take trades with the potential of making twice what you are risking or more.  That ratio is known as the risk – reward ratio.

Example: Let’s say your account balance is $2,000.  You place a trade risking 1% of your account or $20.  The trade goes your way and hits your profit target, resulting in a closed trade and a $40 win.  Since you risked $20 and profited $40, this trade would have achieved a 1:2 risk to reward ratio.

If your average winning trade achieves at least a 1:2 risk/reward ratio, you can be profitable with a 50% win rate.  With a 1:1 ratio, you would break even if you won half of all the trades you took.  It’s easy to see that the risk/reward ratio is an important part of good money management.

In trading, you are almost guaranteed to experience runs of consecutive losses from time to time. Risking a small amount per trade, and setting a maximum acceptable loss percentage can ultimately limit the harmful effects of drawdown periods – helping you preserve your capital.

To new traders, these concepts may seem foreign, but they are absolutely essential to long-term profitability.  By using proper money management, including realistic daily, weekly and monthly profit targets and cutoffs, you are ultimately reducing your risk.

93 thoughts on “What are Realistic Profit Targets for a Successful Trader?”

  1. Hi Chris : how many hours would you have to actively trade each day to make the average 2%. ?
    Mi initial goal is to make $150-200 per day.
    I am looking to start with 20k , is this realistic expectation for somebody totally new to trading.
    I plan to do a lot of homework before I do this.
    D

    • Hey Dan. Thanks for commenting. The time it takes to trade really depends on the system you’re using. Some systems require very little time to operate, while others require you to sit in front of your screen the whole time. If time is a concern (like it is for most), then you should stick to swing trading strategies. Those will be the least time consuming, and the most meaningful trades (since you use a daily chart).

      To meet your goal of $150-200 per day, you’d have to earn 15-20% of your $20k each month. 15-20% is a lot to consistently make for a beginner, but it’s not impossible. However, think about this: in one year, earning only 10% per month, you would more than triple your account. At that point, 10% is over $6K – exceeding your initial goal.

      Obviously, you should demo trade for, at least, a couple of months, or until you are making consistent profits. After doing that, you should have a pretty good idea of exactly how much you can make per month. Then the only challenge becomes doing the same thing with your real money account that you did with your demo account. Good luck!

  2. Chris! I make 2.5% average everyday, sometimes way more like 8 percent in a day. I am also 21 and have all the time in the world. You think I could become big?

    • Hey, Daniel! Thanks for commenting. Even if you only made 2.5% each week, you’d be wealthy after just a few years. Most traders think they need to do better, so they risk more and eventually lose all their gains – not being happy with their “meager 10% per month”. The reality is that someone that can consistently make 10% from the market each month is a superstar in the trading world.

      Now that I’ve said that, I’ll tell you this, if you’re really making those kind of returns, and you’re doing it consistently with a real money account, then you’re already a superstar. You’re already big. Good luck!

  3. Hello,

    When you talk about 10-15% per month returns you mean returns on your principle e.g. $20,000 or your leveraged (100:) $2 million. Because 10% on leveraged $2 million would be 200,000 USD per month and that seems too much.

    Thanks,
    Daniel

    • The money you have at your disposal for leverage doesn’t matter. Neither do pips. We always speak in terms of profit or loss to our actual trading capital. If you can’t withdraw it, then it’s not really yours.

  4. Hi,

    I am trading live now for 10 days. I am using 100:1 leverage have $50,000 in my account and I used about $2 million on 1 open trade EUR/GBP, I bought EUR at 0,6934 and sold it at 0,70382, I made 30,000 EUR in 36 hours. I only made 1 trade because I knew Greek MPs will vote in favour of new bailout plan. The next trade I will do when 20 August when Greek have to pay 3.6B interest to IMF, which of course they will default on again and then I will short EUR. The way I see it there is 1-2 interesting transactions one can do every month. So my non-leveraged return for July is 60% but my leveraged is 1,5%. So when you speak about 10-15% monthly returns, what do you mean leveraged or non-leveraged?

    Thanks,

    Daniel

    • Hello again, Daniel. As I mentioned, in response to your previous comment, I’m talking about the money you put into and can withdraw from your account.

      As for your trading strategy, it sounds like your risking way too much. The trade that you described only gained around 100 pips, but you say that you made 60%. That tells me that you are leveraged up way too high. Most successful traders risk 1-2% per trade (especially in the Forex market). Some very experienced and successful traders risk 3%. What is your exit strategy? What is your plan when one of your trades inevitably goes bad? With that kind of leverage, you’re likely to get a margin call.

      I don’t trade the news myself. I’m a technical trader. I like the charts because they tell me what the market is thinking at that moment. However, I know from my limited experience that the expected news is often priced into the market. Have you ever heard the saying, “Buy the rumor, sell the news”?

      It’s obviously beneficial to understand what’s going on in global financial news, though; because this can keep you out of bad trades, as good and bad news can greatly effect the price of any given market. Most technical traders just make sure they’re out of the market before the news is released. For instance, I’m never in a trade during the non-farm payroll reports.

      I like that you’re not intent on taking many trades each month, as that has little to do with trading success (quality over quantity). Also, don’t let me stop you from making money. If what you’re doing can work for you long-term, then more power to you. Good luck!

  5. Chris! I am able after a long time((2-3 years) of watching the market every second to make even 100% a month sometimes. Not always. I tried all my personal systems on real money and ive lost some of them but not in vain. As you already know real money trading is different than virtual trading. The only thing that i lack is cash. Now, if you think that what is said is too much, consider the fact that i maintained break even for 2 years while trying the systems only on 1000 euros. Unfortunately i dont have university diploma, i studied economics, finance trading all by myself so i cannot go to work for a firm. Do you think that there are firms that hire without diplomas? Thank you.

    • Popa, it’s true the two are different psychologically, and many demo accounts do not include fees. They also, sometimes (or many times), fib on their spread prices on the demo servers. However, if you’re making good, CONSISTENT profits on your demo account for long periods of time (months – not days or weeks), then you should be able to start risking a very small portion of your real money, slowly working your way up to a responsible risk per trade, and have similar success in your live accounts.

      I’m not sure about how a trading firm hires, but I can tell you that no amount of formal education can prepare you for a career in trading. The same is true for many other entrepreneurial endeavors. It takes a pioneering spirit, tenacity, and a LOT of patience.

      Also, most traders are unsuccessful. I know of one woman that started consistenly making around 4-5% per month in her live account, and soon found herself managing a lot a money for a lot of people. That’s because most traders would kill to consistently make even a few percent points per month.

      You don’t need to make a lot each month to make a fortune in the long run. You just need to be consistent and let your account grow. Hope that helps you. Good luck!

  6. I have been training Demo for 5 years, worked eventually out a system that would not make me stress all day. I tested this system on a unrealistic account of 50K with 2-4 trades/day of 4/5K only (to limit the margin). During a period of 2 months, i reached a 65% win ratio (2:1). Considering that I apply a 1:1 profit/loss rate, does it mean that I cannot lose money only if I keep spotting all these winning trades and not all the losing ones. ?

    I went live with only 1.5kE, lost 20% within 2 weeks due to stress, lack of discipline and bad choices. I started getting used to the pressure and refined my system and I am up exactly 20% now after exactly 50 days of live trading. I do use an excess of margin (15% at times) but I systematically use SL and TP (1:1) with an exact profit/loss of about 2% of my equity. If I do reach a 40% profit, I plan to increase my lots by 1K (4-5 to 5-6) and increase slowly my profit as long as I stay at 60-65 % win/loss trade ratio. Do you think I am risking too much ?

    • I’m a little confused about the way you worded some of this, but from what I understand (correct me if I’m wrong), you’re risking 2% of your trading account per trade, and you’re up 20%. If that’s the case, there’s not much to complain about, as long as you can stay consistently profitable with this strategy.

      I have a few suggestions that might help you, though. The reason I recommend risking a small percentage of your account on each trade is because every system goes through periods of drawdown (consecutive losses). If you risk too much, these periods can make your trading life very difficult. If you, for instance, lose 50% of your account, you have to make a 100% return of your remaining capital just to be back at break even.

      What I’m getting at is that 2%, for a new trader, is a little high, but it’s much better than most traders start out using. If it’s working for you (including through your drawdown periods) then keep it up. I wouldn’t recommend risking any more, though. You will start to slowly increase your profits as your account grows anyway. I still only risk 1-2% per trade, depending on the strategy.

      60-65% is a very good strike-rate, especially for a new trader. 1:1 risk/reward is not ideal (in my personal opinion), but I realize some strategies rely on quick profits. It also takes a more powerful strategy and more discipline to successfully execute a 2:1 strategy. I wouldn’t change your whole strategy if it’s working, but you might try employing a trailing stop strategy once your winning trades hit your initial target. This could give you an occasional boost in returns, but you should practice any new strategies before live trading with them.

      I like that you demo traded for so long. Most traders would never do this, so you’re already showing great patience, which is key to being successful over time. Keep taking the best setups, and keep using wise money management. Good luck!

      • I think I have not made myself clear enough. I do bet 2% per trade (meaning up to 6% when I had 3 trades simultaneously), and that could account up to 15% of my equity, but I would never reach a margin call. I know it is risky, but I do use a strategy with fixed profits. I bet a certain amount to win the same or to lose the same amount (1:1). If profitable, I won’t change anything, except my use of the equity. I will increase my lot size by 20% once I reached 40%profit.
        I don’t agree with the ‘belief’ that if you lose 50% then you need to gain back 100%. On paper, it is true, but when I lost 20% at first of my equity, I had lost on balance Win/Loss 9 trades. To get back at the start I won on balance Win/Loss 9 trades because I bet on fixed loss or profit. Probably risky, but Forex is risky like Black Monday (in 1 minutes, everything changed). Now I have more Win than Losses, explaining my profit. I peaked at 70% w/l ratio to drop back after.

        The only times I lost many in a row is when I lost control and did not apply the rules I should have stuck with. Even after 5 years, discipline and patience are difficult to maintain, but eventually I will get 100% solid on these virtues.
        I found the trailing stop was very detrimental to my profit, though I may have tested it at the wrong time only for a too short period. I also found it was more stressful to follow it up. I take what I can take (in general 45 pip average) and I don’t look back on the big 200-300 pip that may or not happen. If I stick to a 60+-5% wining rate, I cannot lose, can I? Slow but profitable !

    • Hello Gracien. Welcome to the site and to trading. I’ll tell you what I would have done differently, knowing what I do now. Hopefully this will help you and others.

      First, you need to find a good trading system, or none of the rest of this will matter, even if you’ve just decided to only take one or two price action signals or something. Find something that makes sense to you. I can recommend one or two systems.

      Second, you need to prove that your chosen system is profitable in the long term. You do this by taking at least 100 demo trades.

      Depending on the system, you can do these trades through backtesting. I recommend doing this whenever possible because it will give you months or even years of experience with your system in only a few hours. Some systems may only give accurate results through forward testing (live market demo trading). For instance, a system that relies on news releases will have to be forward tested.

      Note: For backtesting in MT4, simply hit F12 to move forward one candlestick at a time. Shift + F12 moves backward one candlestick at a time. Alternately, you can use Forex Tester for a more realistic backtest. There is a free version with limited functionality. I recommend using this if you can.

      Gaining confidence in your system is key. If you don’t have this, you will jump ship after your first streak of losing trades.

      Third, only after you’ve proven that you have a good system that you can make work for you, you need to start trading a live account. You need to trade with an account small enough that you will not be devastated to lose the whole thing, but big enough to cause emotional pain after a loss or losses. You do this because an account that is too big will cause you to be afraid to pull the trigger on a trade (especially after a few losses), but an account that is too small doesn’t teach you anything about the psychological hurdles that traders must face.

      Many successful traders recommend doing this early on, and I would too if it were not for the fact that none of this matters when you don’t yet know for sure that you’re trading a profitable system. So figure that out first, then get started on this phase as soon as possible.

      Lastly, once you’re profitable with your small live account, you can start to trade with more and more money, until you are trading your full capital. This part can take some time because you don’t want to rush things so much that you start to fall into psychological traps. Take your time. You will be much more profitable in the future if you do. Also, most successful traders would recommend not risking more than 1-2% on any given trade (especially in the Forex market).

      If you do these things, you will be miles ahead of the majority of traders. I hope this helps you. Good luck!

  7. I don’ get what you mean by this:
    “Weekly and Monthly Goals

    From there, your weekly and monthly cutoffs can be set. I have a more aggressive risk tolerance, so my profit cutoff targets are as follows: 2% daily, 5% weekly and 15% monthly. I don’t use yearly cutoffs.”

    If your daily goal is 2% profit shouldn’t you weekly profit be around 10% and your monthly around 48%.
    Or those figure are just to take the pressure off and have more reasonable figures?

    Best Regards,
    Pedro

    • Hello Pedro,

      Good question. These limits are intended to keep realistic expectations. You’re assuming that it’s possible to hit your target every day, and it may be to some. However, I have NEVER been able to hit my daily cutoff every day of the week.

      I’m perfectly happy to get 2.5% in a whole WEEK, if it’s consistent. I wouldn’t have settle for that when I first started, but I also gave back everything that I earned and more many weeks, because I was trying to force more gains than my system was giving me.

      If you’re shooting for 10% per month (like me), you need to make an average of 2.5% per week. I don’t really use daily or weekly cutoffs anymore. I just keep trading until I’ve made 10% or more. At that point, I’m done for the month. Then only exception to that is that if I’m already close to 10%, but there isn’t enough time for, at least, a few more trades. In that case, many times, I just choose to say, “good enough.” I do that because the next trade could always be a loss, but over a few trades, I’m likely to make more gains – even if a loss comes first.

      This article is still here to give new traders a better understanding of realistic expectations from the market, and to remind them to use wise money management. You have to take what you can get. For some traders that’s much more than 10%, but for the majority of traders 5-10% per month (while risking 1-2% per trade) is a good goal to work toward. If you want more, don’t get greedy – get good. Hope that helps.

      • Hi Chris,

        I get what you mean, but if you follow high probability trades like naked charts aka Price Action shouldn’t we expect more than just 2.5% weekly. I am not expecting to multiply my account by 10x or 100x in a couple of months., but for newbies who start with eg.£1000, profit just 25£ a week seems a complete waste in a short term and may compromise with the psychology factor.

        By the way, what kind of strategy you follow, price action or a couple of indicators, if you are into PA, do you think it is worth getting into harmonics or just keep it simple and look out for patterns?

        Best Regards,
        Pedro

        • Hello again Pedro,

          The idea is to gain complete confidence in your system and trading abilities. If you’re consistently profitable with real money, then you can and should add to your account. Also, if £1000 is not a great deal of money to you, you can risk more and shoot for more, with the idea of building up the account to a meaningful amount of money. The problem is that you will inevitably go through a period of drawdown, and risking too much will quickly ruin your equity curve – if it doesn’t blow out your account altogether. You’re essentially gambling. You cannot carry on like that forever.

          Another point that I would like to make is that aiming for a monthly or weekly goal that is too high means you will have to increase the frequency in which you trade. Most traders think they will make more money by just taking more trades. That is patently wrong. Ask any experienced trader.

          It’s not that taking a few more trades, on it’s own, is going to cause you trouble; it’s the quality of trades that you take that can do you in (dropping down to lower time frames, taking trades that aren’t strong enough, etc.). In essence, trying to force more trades than your system is giving you is a problem, while taking only the best trades from multiple, profitable systems or strategies can logically help you reach your goals. That being said, most new traders don’t have a single strategy that they have full confidence in, much less multiple strategies or trading systems.

          To answer your second question, my strategies have changed over the years. I use more than one system, and multiple strategies in each type of system (and that’s just in the Forex market lol). In the Forex market, I prefer PA strategies the most. I like to take strong signals at major support/resistance zones on the higher time frames. I prefer to take daily candles (swing trading), because of the time freedom and the strength of the signals. However, I will drop down to the 1H or 4H charts from time to time, for certain strategies. If I add an indicator, it is to spot divergence.

          If you think harmonics, or any other technicals, will give you an edge, test it to death. If it works for you, use it. I prefer to keep PA as simple as possible (strong signals, horizontal levels, trendlines, etc.). Hope that helps.

  8. Hi Chirs

    I set my target to 2.5% on each trade. The risk is -1.5%. The system works fine in downturn and flat market. But in bull market, some time I reach my target too easy, and I cannot hold the temptation to set my sell order price higher.
    What is your suggestion on this? Should I restrict with my trading strategy or give it a room when market is good?

    Thanks.

    • If you’re making consistent profits, I’d keep doing what you’re doing. If you really want to try to milk the market for more during the strong trending periods, you might try to exit only half of your position at your normal target (or use two separate orders). You would let the other position ride with a trailing stop system (like support/resistance stepping, stop loss at the bottom of previous bar, moving average cross, etc.), or just wait for another signal in the opposing direction to exit.

      Obviously, you should backtest or demo trade any new strategies – including exit strategies. Try different combinations of risk to reward ratios, break even stops, etc. Testing is key. Hope that helps you.

  9. Hey,

    First of all. I like your responses to previous comments really much, anyway.
    I have a question. If i iam goin to risk 1% of my account. Which is e.g 10k × 0.01 = 100€ and i want to make 2% on that trade which is 200€. The stock has to raise with 100% this seems not legit. I dont understand this.

    Thank you.

    • Hey Jesper,

      Thanks for the kind remarks. If you’re talking about trading stocks, you would only need the stock to double if 1% meant the stock went all the way to zero – in other words, you aren’t using a stop loss set at 1% under a logical level.

      Let me say it another way: You would predetermine a logical place to put your stop loss, and buy the correct amount of shares (for stocks) or contracts (for options, e-minis, etc.), so that when price reached that predetermined point, you would close and would be out 1%.

      Conversely, if price moves in your favor twice the distance you set for your stop loss (say you’re risking 3 dollars per share, and price moves 6 dollars in your favor), then you could close your trade with a 2% gain, having achieved a reward that is twice what you risked.

      In the Forex market, it is much easier to risk the exact amount that you’d like to risk on each trade. If you’re shooting for a 1:2 risk to reward ratio, and have your stop loss at 20 pips, you only need price to move 40 pips in your favor. Hope that helps.

  10. I have been swing trading for about a year now starting with $10, 000 , after some initial losses I now have
    about 19k in my account . I try for profits of 1..5 to 2.0 percent per week.
    Is this considered good? The performance profit on the account computed by the service is about 51%..
    Is that good or average?
    Thank You.

    • Hey William. Good is a relative term. Good for whom? I cannot say what is the average gain of the small group of winning traders amounts to either; only that if you’re earning any consistent profits at all, you’re above average in terms of traders as whole group.

      If it’s working out for you, then keep it up. In another year or less, that 19K could be 40K, then 80K, and so on. That’s the beauty of successful trading. Once you get it, no matter what the gain, it becomes exponential. The next 10K should be easier to come by then the first 10K. Good luck!

  11. Hi Chris
    I really like the way you think, from your risk management to your earning expectations. I would be very happy with 5% per month. However, I have not started trading yet, but I have been studying a system for the last three months and I am ready to look for a broker.
    I live in the U.S. and I understand that I need a U.S. broker that offers a demo. Also, the system that I am studying uses the MT4 platform.
    My dilemma is that I can not get anyone to recommend a broker. I have read many stories about brokers that become sharks.
    Everything that I’ve learned so far has been a mirror of what you tell your readers. I have complete trust in what I am studying and I feel that I can trust you. Therefore, would you recommend a broker? If you cannot publish a name in your newsletter, perhaps you could email me.
    Regardless of weather you can or can’t , I want to thank you for what I think is sound information that you do publish, Thanks, Wayne

    • Updated: 2/12/2017

      Hello Wayne,

      Thanks for the kind words! I always like to hear that I’m helping people. I have no problem recommending a broker. I have used a bunch of them. I’m not an IB or affiliate for any brokers at the moment, so I don’t make any money by referring traders to any particular broker. I can only tell you who I use – take it or leave it. Until recently, I was using FXCM. Due to the recent news, and FXCM being kicked out of the CFTC, I will probably move to OANDA.

  12. Hi I’m am totally new to forex. I have two demo accounts n have read info on it. N watched some tutorial videos. U talked about back testing which makes sense to do Put it this way I just need to learn what about stragies n how to understand it all. Could u direct me to a good place to learn what I need to learn. Thank you

    • Hey, Julie, sorry for the late response. I’m happy to help you. I have a free price action course on this site that you might find useful. Combining those signals with significant support/resistance levels, divergence, stop run levels, or other trading techniques can be a great way to start out trading profitably.

      I’ve tested many paid systems since I started trading. I’ve spent thousands of dollars on them. I only recommend one of them (Day Trading Forex Live) on my this site because it was very helpful to me.

      I can’t recommend any other paid courses at this time. Most of the stuff out there is junk… just a bunch of marketers that don’t actually know how to earn consistent profits from trading.

  13. Sorry about this might be a silly question but I had to seek clarification.

    How do you make calculation of say you want to achieve 2% a week on starting account of 10,000. Somebody said if you make this % amount per week for 3-5 years you will be many thousands to the good.

    What will be the formula to calculate these results.

    How to work this out and see for yourself. Anybody.

  14. hi chris… hope you r doing great. i would like to ask about trusty broker for middle east or south asians countries. i have been trading for one year now but didnt find reliable broker.
    and the second question is .. what does it mean that broker is regulated ? i mean if someone deposit his hard earned money to the broker…. and if there is something happens like alpari did few years ago… so how can one be atleast get their money back from regulated broker ?
    waiting for your swift reply ..
    thanks
    jawad

    • Hello Jawad,

      I have limited experience with brokers outside of the U.S., so I cannot give you a specific recommendation. As for your second question, not all countries are regulated the same way. Different countries require different things from brokers in order to be regulated.

      The best thing to do, if you’re looking for a trusted broker, is to find out what the regulations and regulating agencies are in your country. Then find out whether or not the potential broker you are researching is regulated by those agencies.

      Many brokers will tell you that they are in the “process of becoming regulated by [XYZ]”. Don’t fall for that. They’re either regulated or not.

      Also, being regulated doesn’t necessarily mean your money is completely safe with a broker. It all depends on the circumstances and the regulations in your country. You should always be proactive in protecting your capital – especially if it’s a large sum that you cannot lose.

      Many professional traders keep only half or a third of their trading capital with their broker. They leave the rest in a savings account, but trade as though all of it is with their broker. For instance, if you had $25K with your broker, but $50K to trade with, and you risked 1% per trade, (when calculating your lot size) you would risk 1% of the full $50K – not just the $25K you had with your broker. This is the method I prefer.

      Other traders split their capital between brokers, but do the same thing that I mentioned above. The advantage of this second method is that you can split up multiple open trades between brokers as well. As long as you’re using a responsible trade size, and not allowing too many open trades at once, you shouldn’t have to worry about margin calls with either of these methods. Good luck.

      • thanks chris for your quick response….. i got your point. thanks alot….. you gave me useful idea of splitting capital… but one more question…plz reply this … is ecn broker really good for retail traders? if yes then how to identify a true ecn broker ?

        • Yes. ECN is the way to go. You just need to do your due diligence in researching your broker. Start by reading your broker agreement. Also, true ECN brokers have no dealing desk. They will allow scalping. They will have no restriction on where you can place your stop loss or take profit. They will not have a fixed spread. If you only get negative slippage, you’re not dealing with a true ECN. There are more ways to determine this, but these tips are the most obvious. Hope that helps you.

  15. Hey Chris i really enjoyed this article is very helpfull. In my situation I’m thinking about founding a forex account with $10k and trading once per day risking 0.5% ($50) of that capital on each trade. The goal is to achieve the 1% on a trade ($100) so this would be a 1:2 risk/reward ratio as you mentioned. So in 20 days loosing half of the trades i’d be winning 5% ($500) wich is perfectly reasonable for me, knowing that the risk is pretty low.
    I like the theory of this plan, but do you think it can be done? Also I have trouble finding the correct graphic to look at (I think 5m would be fine) and how long should I be on the market, per trade.
    Thank you!
    Mark

    • What you’re talking about doing is basically shooting for 5% per month, which is a reasonable goal if you have a profitable trading system working for you.

      I like that you’re only planning to risk a small percentage of your account per trade. You’re way ahead already. I also like that you’re realistically accounting for losing half of your trades. Of course, you could lose more than 50% if you don’t have a good trading system, but again, you’re way ahead of the pack already.

      If you’ve read this website for long, then you already know that I’m about to tell you to backtest and demo trade for a while before risking your real money.

      As far as time frames go, the more meaningful setups always occur on the higher ones. Sometimes losing traders can become profitable by switching to the Daily time frame or higher. I wouldn’t recommend going below the 15 Minute, but I guess it depends on the rules of your trading system. Good luck!

      • Thank you for your response Chris! I think my problem now is that i really don’t know how to start setting up a system, I have several months trading demo, but never sticking to an actual strategy. I’ve study how to operate stock markets a few years ago but I guess the moves i learned there apply more in a long term period. Also I see internet i full of crap, since everyone is trying to sell you THE system to get rich. So i don’t know how to move on with this, what would you recomend me to do?

        • I completely understand what you mean. I went through the same thing and lost a lot of money before I found something that worked. That’s why I thoroughly test any trading system before I ever risk any real money on it. Most traders don’t really do that, even though they know they’re supposed to.

          If you’re looking for a full trading system packaged for you, I can recommend Day Trading Forex Live. The system works, there’s a daily preview/review of the market, weekly live trading, and a community forum with a live chat. All the traders there are trading the same system and looking at the same charts as you, so it’s really helpful.

          If you’re hesitant about spending any money on your Forex education, I also have a free price action course. I don’t recommend pure price action trading, but it can be profitable when combined with other strategies, like trading MACD divergence.

          You just need to find something that makes sense to you and then test it so much that you don’t lose faith in it during losing streaks. You need to know that it works for sure. Of course, that means you have to start with a good system, but testing is just as important.

  16. Not many traders can do that, or at least not for long. I don’t really follow other traders on Myfxbook. I only have an account there to run the 100-Trade Tests for this site. I used to have my live account tracked there too, but when I switched brokers, I never bothered to get it set up again.

    I personally get a lot more out of my trading journal, as far as understanding my real trading habits, p&l, comparing trading systems, etc…. Myfxbook is only used because nobody would actually accept my personal trading journal as proof that a system works.

  17. Hi Chris,
    Loved the article. What do you think is the easiest system to pick up? I’m currently trading 4 hour chart on a couple of pairs. Do you recommend sticking to a few reliable pairs or a lot of pairs to find set-ups? Either way, which pairs? Also, do you think a reward to risk of 2:1 is easier to achieve in shorter time frames or swing trades? Thanks!

    • Hey Dom,

      Thanks for commenting. Those are some great questions.

      The easiest trading system that I’ve used was not profitable, but a profitable system don’t necessarily have to be complicated.

      Day Trading Forex Live is profitable and easy to learn. The system itself is not super simple, but we’re all trading this system live together. The community, ongoing daily support, and live trading room really help new members get up to speed fast and trade the system correctly.

      I also like to trade price action. Price action trading is great and it can be used in combination with other trading systems. However, price action techniques take lots of screen time to become proficient at. I’ve got a free price action course to help you get started if that’s the way you want to go.

      As far as trading more or fewer pairs, it really depends on the trading system you’re using. Sometimes you have to trade many pairs to get enough quality setups, but it’s ideal to trade just a couple of pairs until you become very familiar with those pairs. I only trade the Euro and Pound with the DTFL system, but I’ve traded 10 or more pairs in the past.

      I would say that a 2:1 reward to risk ratio is easier to achieve on the Daily chart because the spread is typically a smaller portion of your risk the higher you go up in time frames. That being said, you can get better buy points and more movement (relative to your risk) on the lower time frames, so again, it comes down to the trading system that you’re using.

      Trading the 4 Hour chart on just a couple of pairs sounds like a great plan as long as you’re getting enough quality setups for your edge to play out in your favor each month (or most months). Assuming your trading system is profitable, it sounds like you’ve got the right idea. Good luck!

      • I came with some experience from MTI, a very costly, yet just an average traders’ institute that is more interested in selling more and more of their courses /systems that are tied to its UCS and I realize I can’t continue with such an expensive setting and was desperately looking for cheaper alternative. Why would I not use the free MT4 and make some money instead of being on a subscribed charting software? This led me to Forex Gemini Code (FGC) which to me was a disaster. I realized Alaziac was just a marketing firm for a lot of sweet talk marketers of new systems for newbies and the annoying thing is that they charge high for these non-profitable systems sold on market high pitch. I later came across Top Dog Trading as well but the scare of FGC had not allowed me to make the move, though I kept taps of TDT. I realized I was hooked to MTI based on their Fibonacci tool. I searched for a tool that would give me the Extensions without me having to place it opposite the direction as is defaulted on MT4. I became successful in this by imputing negative numbers and levels into the MT4 Fibo tool after working them out. I tested this over and over by spreading the default opposite and the levels coincided. When I came across your Fibo tool adjustment article and the one you gave from another source, plus the fact you have reviewed TDT positively as well as stated how horrible FGC performed, I realized this was a fellow trader one should give a high consideration of trust to. I’ve therefore stuck to reading some of your articles which I must say are mostly revision for someone like me with my experience from MTI. However I was even more impressed by your recommending DTFL and IP as better than TDT. Coming from someone like you who’s passed through some experience, I believe you are not selling for them and you’ve won one fan who’ll try DTFL. I’ve in fact been visiting their site to watch some of their videos to learn. Can you also help review a system called [removed]? I wait to hear from you.

        • Wow, Zat! Your story really paints a picture. I looked into MTI myself, BTW, but never pulled the trigger. I know the feeling of getting burned by slick marketing. FGC was one of the worst, but far from the only time it happened to me. I’m glad you came across my site and that I could already help you in some way. I think you’ll be happy with DTFL if you choose to give Sterling a shot. For me, DTFL was a breath of fresh air. I hope it’s the same for you.

          I probably will not review the system that you mentioned. I’m busy preparing some things for the future of this site. When I get the time I have several other reviews already lined up. I wish I had the time and money to test every system on the market to let you guys know which are profitable and which aren’t, but I’m only one man. Maybe that will change in the future. Thanks for reading! I hope you check back in from time to time.

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