How much is a realistic monthly goal ?

Hi all,

I want to set a monthly goal for me of about 10%, this means a 0.5% daily return on average to cover for possible losses, is this a realistic goal ? if not, what would be ?

MT.

imho as long as its positive and more than you could get from keeping it in the bank you will be doing ok.

cheers

kiwi

Depends on how good you are.
If you are a complete noob you can feel lucky if you don't loose it all
after the first month.

10% are possible but not easy to reach in average(!). Feel lucky if you end up positive in the long run. That would be the first goal.

Monthly gains will fluctuate per your experience and with influence from market conditions.

I would say a good place to start is to simply achieve 0% a month (while actively trading, obviously). This is the first step that needs to be taken. There is no sense in aiming for 5,10,30 % gains if you cant even breakeven. Advance your trading career in planned and organized steps. Set acheivable goals such as 0%, then work up from there.

MT, I disagree with anybody who recommends setting profit targets.

Firstly, the question should not be "what return can I make?" but "what drawdown am I willing to tolerate in order to make a given return?". You can always increase position sizes, and/or trade more frequently, to increase return, but this also increases risk. Return and risk are inseperable, and always in some way proportional to each other.

Secondly, what happens if your monthly target is +10% and you find yourself -5% after the first week? Or your target is +20 pips per day, and you're currently -40? How do you catch up, without trading inferior quality setups, and/or taking larger position sizes? The focus should be on trading a method/plan accurately and consistently, and preserving capital, as opposed to aiming for a predetermined level of profit. Trade accurately, and manage risk, and let profit take care of itself. Especially if you're starting out.

But, to answer your question, breaking even after your first 12 months' trading is very good (it proved too difficult for me - even in a demo account). For a more experienced trader, averaging 5% return per month while keeping drawdown < 20% is excellent performance; averaging 10% per month (compounding monthly, that's > 200% per year) is outstanding.

David

8-12% Is really possible the more you want to make then you also have to remember the more you may lose!

I make about 15% a month and risk about 20% a month things have been good for me with those #'s

hope this helps

Thanks a lot everyone for your help.

great reply David, thanks a lot. About being down 5% in the first week, My rules are not to risk more than 2% on a trade, and I trade the daily charts two or three times a week, and I promised myself NEVER to put on a trade without a S/L. So if I get a losing week or even a losing month, so what ? As long as I stick to my plan I don't have to worry about winning or losing, right ? all I have to worry about right now is being able to interpret price action correctly. (I'm still on demo, and I'm still a beginner .. and as I stated before in another thread, I decided to learn trading price action only with no indicators, a bit hard to get used to but I'm trying my best.)

and about your demo results, have you really stayed on a demo account that long ( > 12 months ) ? I'm asking that because I'm always reading that learning from a demo account is not at all as doing it on a live account. And you seem like a very experienced trader to me.

MT.

Good for you M4X, keep it up. May I just ask whether these numbers worked for you for a long period of time ? I mean, have you actually been able to be up more than 200% in a year ?

MT.

How are they not easy in average ? do you mean the daily 0.5% average that I mentioned ?

Thanks for the encouraging post btw

Thanks for your reply Gaston, makes sense.

It is good to have a monthly target and everything but your main goal should be to end up positive at the end of the year.

If you are a new trader then you should not concentrate on making money but concentrate on executing your trading plan to the letter and only rewarding yourself when you stick to your trading plan.

A good idea is to look at yourself as your own employee and dont believe you get payed for making pips or money but get paid for executing the trade accordingly to your trading plan, no matter how well you do, dont reward yourself if you did not stick to your plan.

If your system is good enough then the money will flow, if not then you will need to put certain structures in place to allow yourself time to work on your system.

Once I started doing this I retired from my day/night job within 4 weeks back in the early nineties.

Hope this helps

cheers

Sorry People half asleep over here in OZ,

One other thing I forgot to mention is that you really need a good trading plan, as they say if you dont plan to win then you are already planing to loose.

If you type "Trading Plan Template" in the search function at the top of the page you will find numerous posts about trading plans, I have gone through a few but would recommend the thread "trading plan template started by Isotonic".

hope this helps

cheers

I like this thought. (I am borrowing a well known members tag line here)

"Before you attempt to beat the odds, be sure you can survive the odds beating you."

(thank's phil)

http://www.forexfactory.com/images/buttons/quote.gif

In Agreement

I don't have a target set in stone anymore, still have a goal to achieve, but I trade 100% mechanical, have cast in stone entries and exist, taking away all emotions and only take what the market pays me, and yes.... also paying the market for that privilege.

Bottom line is to take what your personal system gives you and stay with the rules, MM etc. In your case its Price Action, whish I had the time for that... but one day when I'm Full Time :-)

MT, I'm not a pro trader, in reality just a programmer who dabbles in trading. Because I live in New Zealand, I need to stay up all night to catch the European/American sessions, and I value my sleep more. My enthusiasm to burn the midnight oil decreases as time goes by! Personally, I find sitting at the computer for hours at a time, waiting for suitable setups, dead boring.

I did run a live account for about 3 months, as an experiment, and lost 9% in the 3rd month. But that was during 2006; hopefully I've learned a little since then.

IMHO demo trading is very important. Personally I prefer to prove my ideas over a large number of demo trades before putting $$$ on the line. If I'm not sure that my approach is long-term profitable, then I'm really only guessing - why donate my hard-earned money to the market? And if I'm not 100% confident that my approach is profitable, then it's much more difficult to trade it consistently when there's real money on the line, especially following a sequence of losses. Hence I want to develop that confidence before I reach for my wallet.

I know that others feel that demo is a waste of time. Well, I guess it's a personal decision. Different strokes for different folks.

Good luck - I wish you many pips

David

Hi,

What exactly do you mean with “trading a method/plan accurately and consistently”? Not a rude question. Is that “what drawdown I’m willing to tolerate in order to make a given return”? For example, this week I’ll risk 10% of my money and if this happen I’ll stay calm for awhile, or other example: on each trade I’ll place the S/L 20 pips down.
I had in mind a profit to gain each time I place an order, but as you mentioned that I doubt.


David

I dare to say that 20 pips SL is too short, I don’t know what your trading style but I used to go really short on my SL because I was afraid I would lose but then I realized that the value would soon hit that level so the order was closed without giving time to the price for it to raise.

The S/L size depends also in the T/P target. Scalpers used to trade with minimum of these quantities. Usually they have goals of 10 pips per trade. I cannot believe these but I know some of them. Of course the risk is bigger and they have lost many pips. At my side I used to place it more than 50 pips to begin. Do you have specific strategies to locate the S/L?

IMHO I need to have a plan for my entries, and a plan for my exits. And one that has proven to be profitable over a large enough number of trades so that I'm confident that the results are more than just 'luck'. Otherwise, how can I know that I'm not just guessing?

For example, my entry plan might be that I wait for a certain pattern of candles to occur during an uptrend, after which I place a buy order when price exceeds the highest candle in the pattern, with a stoploss that's 10 pips below the previous swing low. My exit plan might be to close half of the position when price reaches a certain Fibonacci level, and the close the other half only after a 50 pip retracement from the highest point in the move (i.e. a 50 pip trailing stoploess). This is just an example of a possible plan, of course. Each trader needs to find something that's profitable to a point that satisfies him/her.

Re return and drawdown. I can make any return I wish per month, by increasing my risk on each trade. For example, let's say I start with $10,000 in my account, and I risk 1% ($100) per trade. At the end of the first month, my balance is $10,500, which is a 5% gain, but along the way it went as low as $9,800, which is a drawdown of 2% (i.e. $200).

If I'd been willing to risk 2% per trade, then my returns would have been doubled (balance would be $11,000, or 10% gain), but my drawdown would have been doubled also (low balance would have been $9,600, or 4% drawdown).

At 3% risk per trade, monthly return would have been 15%, but with 6% drawdown.

And so on.

Hence (assuming that I have a profitable method) I can basically average any monthly return that I wish, provided that I'm willing to take the commensurate risk. Position size, return and drawdown are all directly proportional to each other.

In the above (hypothetical) result, the ratio of return to drawdown is 5 to 2, or 2.5. This is also called "expectancy" or "profit factor". It doesn't matter whether we measure this ratio in pips, dollars, or percentage, the result is still the same.

Obviously the goal is to maximize my returns. So the question becomes "How much drawdown am I willing to endure?" Am I willing to put a quarter of my account on the line, or half my account, ...... or what?

Of course one month's performance doesn't really prove anything, but I'm just using it as an explanatory illustration. In reality, each month I would expect to get fluctuations in performance, depending on how my method (plan) performs under the prevailing market conditions. For example, if my method seeks out trends, and the market moves largely sideways, then returns will likely be poor for that particular month; but I'm counting on the fact that I'll ultimately encounter enough trends to make the method long-term profitable. However, despite the fluctuations, after several months (preferably years) it should be possible to gain an idea what average returns and drawdowns are likely.

Hope that explains.

Good luck,
David

Im making about 100% a year and Ive done so for a few years now. some months are better than others but it really comes down to MM and thats means sticking to the rules and know the Market

Im not some super trader and would never claim to be but I do ok for my self Im not into compounding profits so my 100$ a year is my income
Im not talking about becoming a millionair after 3 years like some people like to say with compounding...Ive tried and trying to keep making 10% everymonth and never pulling profits is nearly impossible
I dont care who you are you still get emotions!

hope this explains more