noob/noob-like question about ROI in forex

Hi all,

Recently I was going through the trouble of finding a good bank with good returns, better offers .. etc.

After finally settling on one, I thought to myself, why not just invest in forex ? I know the rest of the post may sound noobish but I hope it's not that bad.

I have went through the "New, very excited, stupid trader" phase before that many people go through when they first start trading forex. Wiped out a micro account, and although it's not a mentionable loss, losing real money like that is totally different than demo/virtual money. Luckily, this small amount was enough to teach me to calm down and listen more carefully to what others have to say.

I'm still a rookie when it comes to forex, so I was thinking of getting back into trading with a goal to achieve a yearly interest comparable to that of a retail bank, is that realistic to shoot for ?

I have made a few calculations based on expected rules and hypothetical data :
Risk 2% per trade.
Shoot for 3% profit (per trade).
Assuming my strategy has a 51% success rate (realistic ?).
Pip price = 0.01% of initial deposit.
4 trades per month.

Result = 26.4% gain over the year. That's without compounding, I'm trying to keep it as simple as possible. (And of course all of those numbers are just rough figures).

I'm not really that anxious to get back into forex, so I think I'll have enough patience to stay with a demo account for a while, then a micro account for an even longer while to make sure the strategy is solid enough for my goals and then if everything is OK move my money to my forex account.

Does this make sense at all ? Or is it still just plain noob talk ?

You mention a goal of comparable return to a retail bank - then list your excel calc for 26%. Excel causes one to start dreaming and wishing and then you are lost.

"Don't wish, don't start - wishing only wounds the heart" ~Wicked

Reality is if you can achieve a rate greater than what you would return from a supposed safe investment ie. a US Treasury bill, then you are doing well.

Frankly, there's nothing wrong with day-dreaming and whatnot as long as it doesn't affect your system. But it isn't profitable for you at this stage of the game.

The win percentage depends on the type of trade.

Roughly speaking:

Trend following - win 30% of the time
Scalping - win 60-90% of the time

Most trading systems you find on these boards are a blend of the two, so I'd say 40-50% winning is about what you'll have.

Honestly your win percentage and all these numbers depend on your system. If you're writing this stuff out for us to judge, I'd say the best course of action is go trade on demo for a week or two and then you'll know for certain.