There are a huge number of misconceptions surrounding the forex markets, from how long it takes to master this market, to average returns to trading strategies. If you’re following traders on social media, you have most likely seen earth-shattering returns that completely outperform the best funds, family offices and prop firms in the world… But this isn’t realistic for most traders.  Elite Trader

A 1%-4% return per month in the forex market is a great return for retail traders. Without compounding, this equates to a return of between 12%-48% per year, which vastly outperforms the S&P 500 and many other market indexes.

In this article, we’re going to look at exactly what kind of returns you should be expecting, how to influence these returns and everything you need to know! So, let’s get into it…

A Good Return In Forex – What Percentage Gain Is Good?

The reality is, many more traders are profitable than they realize. Many retail traders are not utilizing funded trading accounts like Lux Trading Firm to grow their capital, meaning they are trading small trading accounts. Let’s take an average monthly return of 2%. This is actually a great return and can change your life if you appropriately manage risk, obtain capital and compound your profits. However, on a £1000 trading account, 2% per month will net you £20 per month – which most people earn in an hour or two from a job at minimum wage. Unfortunately, £20 is not enough to change anyone’s life, and it can be incredibly demotivating when you’ve spent a whole month trading each day. 

This is where we’ve seen so many traders increase their risk dramatically or even give up on trading completely. Despite their returns being incredible, they’ve seen Instagram traders doing $500,000 in a month from a $100,000 account, and it all seems completely unachievable.

It’s important to look realistically at your trading returns. If you’re consistently generating 1% or more per month – it’s very much worth sticking out your trading career and taking on additional funded capital!

Factors That Affect The Monthly/Yearly Return You Generate From Forex Trading

There are so many factors that affect the amount of percentage you can generate in the markets. These factors often make or break traders’ careers.

These include:

Your trading strategy

Your risk appetite

Risk management methodologies

Market conditions

Utilizing EA’s/trading bots

Frequency of trading setup

Risk to reward ratios

Time to trade the markets

All of these factors need to be carefully considered and dialed in to generate the best returns possible from the markets. It’s also important to not compare your returns to that of other traders. If you’re working a full-time job and swing trade for 4 hours per week, doing your chart analysis on a Sunday night once the kids are asleep, you’re unlikely to generate returns outperforming that of a trader with a Bloomberg terminal who trades for 60 hours per week. 

With that being said, your returns may still be good enough to earn a great living through trading!

Risk Appetite Greatly Influences Percentage Gain

It doesn’t take a trading expert to understand the influence that your risk appetite can have on your returns within the markets. For example, from 10 winning trades, a trader risking 0.1% per trade will most likely earn less in monetary value than a trader risking 4% per trade on the same account size. However, this game is about the long term. When that trader risking 4% per trade loses, his psychology will start being affected. If that turns into a heavy drawdown streak, the trader with higher risk will have either lost their funded trading capital or blown a giant hole in their account. The trader with a much smaller risk per trade will be able to survive any losing streaks and still operate in the markets for many years to come! 

The takeaway from this is, don’t increase your risk percentage in the hopes of earning higher percentage gains – you should be solely focused on survival, rather than trying to reach the moon!

Using Prop Firm Funded Accounts To Make A Living From Lower Percentage Gains

Many traders seemingly still aren’t aware of the options they have at their disposal for increasing their trading capital. Prop firms have become a great way for traders to access a profit split on large volumes of trading capital, without needing to spend years compounding or finding their high net worth investors. 

Take our offering here at Lux Trading Firm, for example…

With our $200,000 trading account (which can be grown to $10M) traders earning an average of 2% monthly will be earning $3000 per month already from their trades – with no additional risk! If a trader was consistently profitable and grew via our scaling plan to the $1,000,000 account (only 2 milestones away), that same trader would be earning $15,000 per month from their trades – considerably higher than even some of the highest paying jobs. It’s very much worth considering if you’re in the stage of reaching profitability from your trades but no substantial monetary returns!

 Understanding Your Strategies Potential Returns

 There is a huge amount of trading strategies out there, fairly simple strategies, that are capable of generating a small percentage return in the market each month on average. However, these strategies typically don’t make money every month. Even the best strategies we’ve seen have small months, losing months and breakeven months.

This is where back testing comes into play. Back testing, in short, is where you test your exact trading strategy on historical data, so you have a set of 1000+ trades to analyze. This data will be invaluable because you’ll understand the average monthly percentage you’ll be netting from your strategy, along with seeing if it’s actually profitable. Once completing a thorough back test, you can apply those returns to a funded trading account and have a rough idea of what your strategy will be earning – should those returns stay consistent.

In Summary – What Is A Good Return From Trading Forex?

In conclusion, any small consistent returns from the forex markets is a good return! Many of the most consistent forex algorithms in the world earn between 1-4% per month on average, but this is more than enough to change your life! Focus on consistency, rather than making groundbreaking profits. Utilize funded trading accounts to then scale your trading capital, rather than increasing your risk profile.

About Company :- We are a leading proprietary trading firm based in London (UK), specializing in supporting experienced prop traders.

 Our commitment is to help traders excel and provide the tools and capital they need to compete in a marketplace defined by change and disruption.

We are focused on seeking out trading and investment opportunities to grow our capital in the global financial markets.

Click Here For More Info.:- https://luxtradingfirm.com/


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