What Profits Do You Expect in Forex Trading?

[Brayan]

Now that we've discussed some of the factors to entering a trade, and when to exit a trade, we need to spend some time on what kind of results you should expect. This is vital to understand before you start trading a strategy or system.

Traders and system builders need to have a solid and realistic understanding of what they expect in the future, and specifically what returns they expect to produce in terms of profits. I ask traders all the time what kind of returns or draw-downs they are expecting in their account and a surprising number say they have no idea. They want to be profitable, but don't understand how a string of trades may impact overall portfolio value. This kind of trading without planned expectations and rules is a major barrier to success and always leads to losses.

So what's the problem with not knowing what to expect?

Random Trading

Many traders have a propensity for random trading. These kinds of traders seem to be fishing for opportunities. They may take a trade or two from someone else they saw on a forum or newsletter, or they may just be entering trades without a firm stop loss, profit target levels or other risk control procedures in place. They have a tendency to "wait and see what happens." Usually, what happens is a gut wrenching period of indecision, loss and frustration. Misunderstanding of trading costs

The second issue these traders deal with is a lack of understanding of system or strategy costs. I usually refer to this as "trader myopia" or "tunnel vision." These traders concentrate on one trade at a time and are not thinking about tomorrow, or next month's trades, and don't understand the costs that can impact results in the long term.

In this lesson we will address those issues, and walk through the process of developing accurate expectancy for the system we have been building so far in the course with.

What is expectancy?

Expectancy is what it sounds like. It helps you understand how winners, losers, gains and losses relate to each other over the long term. This process helps you understand what your trading system profits should be, and helps validate your backtesting.

In this lesson, we will develop expectancy in three steps. First, you will calculate your win- and loss-ratios. Second, you will calculate your reward-to-risk ratio. Finally, you will combine the two numbers into an expectancy ratio. That information will help to understand what you can expect in the future.

Steps for developing expectancy

1. Calculate your win and loss ratio
2. Calculate your reward to risk ratio
3. Combine those two ratios into an expectancy ratio

For more information, go to http://www.learningmarkets.com

[georgeharry]

Well according to me actually forex market is not about making profit in percentage its about how much pips you make per trade. As with any market investment, you can expect ups and downs. If you make good pips per trade then obviously your profit percentage should be more than 1%. I would try to get as great a profit as possible and of course depending on the size of the investments, the greater the profit will be. It totally depends on how proficient you are in trading in forex. Because in forex you are getting margin of 100% means of your $1 you are getting $99 from forex company and if you are able to get 1% means you are doubling your investment every day.

[addisonclave]

I think its really hard to give straight answer to your question,its really depends on world economy,but the profits is pro of course,especially with the current financial market.I would expected more profits and its really depends on the size of investments,the greater profit will be.

[anselgrey23]

I trade FX for a living and still make a profit - even in this market. Despite messing up a number of times Im still well above my weekly target this week. Trading off the pivots like everyone else does is the most tried and trusted method.

[aliciavali17]

Consistently for 10 years,

100% return per year is good trader
100% return per quarter is genius trader

$500 is enough to start trading Forex. You need a mini forex a/c. If you are smart and experienced, you can turn $500 into $5 Millions. But this result is not typical.

[mickyjashuas]

As with any market investment, you can expect ups and downs. If you put your good ideas then clearly the ratio of profit per trade should be greater than 1%. I will try to make as much as possible, of course, depending on the scale of investment, greater profits, with huge profits. It all depends on how you proficient in the foreign exchange transactions.

[carolynccourtney]

You can make over 10% steady monthly, if you trade a mini or micro account. The moment you start trading standard accounts, your emotion gets the better of you and you begin to lose more than just pips.if gain.I prefer you can make 50 pips per day, there will be plenty of money count. I can am not so good at math or statistics ..