How can I make a living trading forex? | Forex Factory

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How can I make a living trading forex?

  • #1
  • First Post: Aug 8, 2009 5:45pm Aug 8, 2009 5:45pm
Dear forex friends: I have been studying forex for a good while. I have been trading a demo account. I have heard people say that 200 pips a month can change your life. I can get 200 pips a month, but I have been taught not to risk more than 1-2% of my equity, so, how could I possibly live on 200 or even 2000 pips a month? I was told never to trade for more than $1 a pip on an account the size of mine to invest i.e. 10-20K. I can stack on my trades, but it still seems that I am risking too much if I do that. Can someone spell out for me how I can just make a measly 2K a month with a 10K account or a 20K account? How are people getting 1% a day? Am I stupid, or can someone spell it out for me in simple terms? PLEASE HELP if you will! I will be eternally grateful for any help you can give me!
  • #2
  • Aug 8, 2009 10:56pm Aug 8, 2009 10:56pm
1 standard lot = $10/pip
1 mini lot = $1/pip
1 micro lot = $0.1/pip
1 nano lot = $0.01/pip

That's for 1:100 leverage.

I'm sure you can do your basic math and calculate the rest on your own.
  • #3
  • Aug 9, 2009 1:18am Aug 9, 2009 1:18am
Quoting lynnsmom
Dear forex friends:...
Pay off your mortgage, save enough to live on for a year, and save enough to trade 1 full lot, at 2-3% per trade (divided by stop size). If you can trade profitable on demo for over 6 months then you are good. The above is the ideal scenario, otherwise stress and pressure to pay your bills will effect your trading.

Regards

Mark
I hear and I forget. I see and I remember. I do and I understand.
  • #4
  • Aug 9, 2009 1:33am Aug 9, 2009 1:33am
Quoting lynnsmom
Dear forex friends: I have been studying forex ...........How are people getting 1% a day?
If one risks 0.1% per trade, takes 100 trades a day (one by one - not more than one trade open at any given point of time), manages to get at least 55 winners and 45 losers with risk / reward ratio of 1:1 ..... can theoretically make 1% a day.

However, kindly remember that trading is simple but not easy.
The Thief of Wall Street
  • #5
  • Edited 1:57am Aug 9, 2009 1:47am | Edited 1:57am
Mostly they are not making 1% a day with taking a risk that small on their account. My risk is anywhere from 2-4%.

Because I scalp with only a 20 pip stoploss that means I can afford to put a bit more cash per pip on each trade. I couldn't trade on the daily/weekly even 4h chart because the amount of drawdown you must expect on there just wouldn't be worth my time placing the trade in the first place.

On an account size of $10,000 I would be placing trades of $10 pip, which in my case is 2% risk, if you have a system where you need a much larger stoploss then you will need to have a much lower lot size on every trade which in turn will give you a much lower return with what you stated, 200 pips a month.
  • #6
  • Aug 9, 2009 1:49am Aug 9, 2009 1:49am
Quoting tac
Pay off your mortgage, save enough to live on for a year, and save enough to trade 1 full lot, at 2-3% per trade (divided by stop size). If you can trade profitable on demo for over 6 months then you are good. The above is the ideal scenario, otherwise stress and pressure to pay your bills will effect your trading.

Regards

Mark
If everybody did that, there would be very few forex traders around. Most people want to do this to earn some extra money to help with those bills and if you play it carefully it can be done part time, no need to give up the job you have until you are proficient.
  • #7
  • Aug 9, 2009 2:12am Aug 9, 2009 2:12am
Quoting luckylady
Mostly they are not making 1% a day .
True. I doubt even 90% of them are making any profit at all.

Quoting luckylady
I scalp with only a 20 pip stoploss ....On an account size of $10,000 I would be placing trades of $10 pip
20 pips sl X $10 per pip X 30 losses in a row (people do experience this number of losers) = $6,000 loss (60% of capital).

This seems a bit high to sustain extreme scenario, which may not be extreme for an inexperienced trader


Yes, quitting job is not adviseable. One should rather try to trade part time or on bigger timeframes than quitting job. All investment banks have non speculative investments and speculation part is generally 20% of their total investment. Same should be true for most individuals.
The Thief of Wall Street
  • #8
  • Aug 9, 2009 2:39am Aug 9, 2009 2:39am
Lynnsmom,

Have a look at this thread. http://www.forexfactory.com/t/155393...living--1.html
  • #9
  • Aug 9, 2009 3:06am Aug 9, 2009 3:06am
Quoting Chicky
True. I doubt even 90% of them are making any profit at all.



20 pips sl X $10 per pip X 30 losses in a row (people do experience this number of losers) = $6,000 loss (60% of capital).

This seems a bit high to sustain extreme scenario, which may not be extreme for an inexperienced trader


Yes, quitting job is not adviseable. One should rather try to trade part time or on bigger timeframes than quitting job. All investment banks have non speculative investments and speculation part is generally 20% of their total investment. Same should...
I really can't imagine having 30 losing trades in a row but I suppose some people do. Some people could also have 50 losses in a row and lose all their money, but we can only go by our normal hit rate and trade accordingly, surely that is where risk/reward expectation comes in, along with the demoing and very small live account until we know those.
  • #10
  • Aug 9, 2009 3:11am Aug 9, 2009 3:11am
Quoting Zen
1 standard lot = $10/pip
1 mini lot = $1/pip
1 micro lot = $0.1/pip
1 nano lot = $0.01/pip

That's for 1:100 leverage.

I'm sure you can do your basic math and calculate the rest on your own.
You couldn't be more wrong.

1. Leverage does not affect your per Pipvalue
2. 1 standard Lot does not have to be 10USD/Pip. Only when USD is the second currency of the Pair.




How to make a living?
1. Have a large amout of cash so you don't have to aim for 300% p.a which is only possible with huge amounts for risk. Professional Fundmanager are happy if the can get 1% per month on average which yields 12,68% p.a

Make money. Keep money and make some more.
  • #11
  • Aug 9, 2009 3:19am Aug 9, 2009 3:19am
Quoting Tjpld
You couldn't be more wrong.

1. Leverage does not affect your per Pipvalue
2. 1 standard Lot does not have to be 10USD/Pip. Only when USD is the second currency of the Pair.




How to make a living?
1. Have a large amout of cash so you don't have to aim for 300% p.a which is only possible with huge amounts for risk. Professional Fundmanager are happy if the can get 1% per month on average which yields 12,68% p.a

Make money. Keep money and make some more.
Professional fundmanagers are happy with that amount because their clients are happy with that amount and in the meantime they get to charge 2% of a few billion dollars just for getting them that 12%, why risk any more than you have to.
  • #12
  • Aug 9, 2009 3:35am Aug 9, 2009 3:35am
Quoting billflet
Lynnsmom,

Have a look at this thread. http://www.forexfactory.com/t/155393...living--1.html
That is an excellent thread and one post in particular made me change my thinking completely and took me from playing around to trading for a living, just by changing my mindset, something just clicked when I read it: http://www.forexfactory.com/showpost...&postcount=197
  • #13
  • Aug 9, 2009 9:13am Aug 9, 2009 9:13am
Tac:

Thank you very much.
  • #14
  • Aug 9, 2009 9:15am Aug 9, 2009 9:15am
Chicky:

Thank you very much!
  • #15
  • Aug 9, 2009 9:18am Aug 9, 2009 9:18am
luckylady:

Thank you VERY much!
  • #16
  • Aug 9, 2009 9:18am Aug 9, 2009 9:18am
billflet:

Thank you very much.
  • #17
  • Aug 9, 2009 9:59am Aug 9, 2009 9:59am
Quoting Tjpld
You couldn't be more wrong.

1. Leverage does not affect your per Pipvalue
2. 1 standard Lot does not have to be 10USD/Pip. Only when USD is the second currency of the Pair.
Hahahahaha...you're right.

I keep forgetting that there are other pairs besides GBPUSD.

Thanks for the reminder.
  • #18
  • Aug 9, 2009 2:26pm Aug 9, 2009 2:26pm
Quoting Tjpld
Fundmanager are happy if the can get 1% per month on average which yields 12,68% p.a
.
Exactly! The richest man in the world has averaged about 20% return a year... and all us little folks think we should be making three times that (compounded) a month?

I have made 13% this year so far and I am beside myself. The reason? I know that what I am doing now is something I can recreate. So long as markets exist I will be able to do what I have done over the past year and a half. I finally, after 4 years, can say I have this game figured out enough that I can understand a path that will eventually allow me to reach my goal. Even though reaching that goal will be about 30 years later than I had initially planned.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #19
  • Aug 9, 2009 2:42pm Aug 9, 2009 2:42pm
Quoting StockKJay
Exactly! The richest man in the world has averaged about 20% return a year... and all us little folks think we should be making three times that (compounded) a month?

I have made 13% this year so far and I am beside myself. The reason? I know that what I am doing now is something I can recreate. So long as markets exist I will be able to do what I have done over the past year and a half. I finally, after 4...
The reason why everything under 50% per month isn't worth it for retail traders is because the play around with their 1-5k mini accounts.
  • #20
  • Aug 9, 2009 3:13pm Aug 9, 2009 3:13pm
Quoting Tjpld
The reason why everything under 50% per month isn't worth it for retail traders is because the play around with their 1-5k mini accounts.
With smaller position sizes we can get it and out of trades and be more agile therefore you can compare smaller traders to fund managers. Many traders on here earn double figure % a month.
I hear and I forget. I see and I remember. I do and I understand.
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