What sort of Forex trading returns you should expect?

What sort of Forex trading returns you should expect?

People can become very dreamy when they hear the success stories of Forex millionaires, and they tend to rush in and use a huge amount of capital, hoping to generate thousands of dollars overnight or millions of dollars after a few weeks.

A 1% return on investment is considered the most realistic when you are trading in the Forex market. However, having a consistent goal and upgrading your strategy over time is what makes you rich.

As a Forex trader, you need to be well-prepared with a plan and strategy. As part of your plans, you should set realistic expectations for how much you can make from trading Forex, especially as a beginner.


What is the Average Return on Forex Trading?

On average, Forex traders set their Forex monthly return expectation to between 1% and 5%, which is fairly achievable among almost all traders. However, some argue that even 5% is too hard, and 1% is a much more realistic goal.

These rates are the result of hundreds of thousands of people who trade Forex every day, meaning that the chances of failure are high, and there is always a chance that something can go wrong.

For example, if you are trading with $100 and everything goes right, then you should be making monthly returns of 1%, which means you are making $1 per month.

Now, this could seem very little, but remember that winning a little profit is still profit, you are not losing your money as you still have the capital that you used for investing, and you are at least not going into the red.

Most of the top Forex traders made their money by taking higher risks and using much more than $100. Most Forex millionaires have taken a considerable risk by using $100k for their Forex trades, and with such trading capital, the Forex returns can be like $5,000 monthly.

Add to that the fact that Forex returns can vary depending on the time and the effort a trader gives to the Forex market. The more research you do and the more time you spend on trading, the better qualified you will be to make money in Forex.

What Does It Take to Become a Successful Forex Trader?

It is all about experimentation and dedication. You need to test things by yourself to develop your own strategy, and to have the dedication to carry on despite any losses you might incur.

It is totally okay to be inspired by how much professional Forex traders make, and you may aim to do the same, which is totally fair because trading on Forex requires time and discipline.

However, one very important thing to know is that those Forex traders who secured millions of dollars, have had different market opportunities than you, and they seized them at the right moment. Today there are different market opportunities and different market conditions.

Add to that, most Forex millionaires have been through difficulties when they could not achieve their Forex ROI and might have lost some of their money before they got where they are today. Since risk is always associated with Forex trading, you should expect that something can go wrong, and you might lose your money.

For example, Bill Lipschutz, one of the most successful Forex traders and the Director of Portfolio Management for Hathersage Capital Management, traded his first $250,000 into a losing market position and lost all his money because of a poor risk-management decision and neglecting risk-reward ratio. It would have been reasonable for Bill to quit, however, consistency is key.

In fact, trading and achieving realistic Forex returns requires discipline and research, and one of the best things you can do as a trader is to keep your attention on your own performance and not compare yourself with other traders.

It is easy to become distracted by Forex investors and influencers on different platforms talking about how easily they made their money on the Forex market, and they can sell you a “profitable 1-minute trading strategy”, but as you know, there are no shortcuts to success.

“In trading/investing, it’s not about how much you make but rather how much you don’t lose.” - Bernard Baruch

Almost every success story in Forex had hundreds of failures behind it that you might not know about, and some numbers say that almost 90% of Forex traders lose their money and end up quitting Forex.

So if you are trying to become successful in Forex trading and attain a satisfactory Forex return on investment, you shall remember these important things.

  • Do your research
  • Set your expectations
  • Experiment with strategies yourself

Do your homework

You cannot expect to make considerable profits from trading something that you do not know. You need to educate yourself about what the Forex market is, what factors affect the currencies' fluctuations, the average Forex trading ROI and expected returns from each currency pair. See our investing for dummies guide for more info.

Set your expectations low

Whether you are starting small or starting with big trading capital, you need to set your expectations low in order not to get frustrated when the market goes in an unfavorable direction, and so you will not lose most or all of your capital.

So if the average Forex return is between 1% and 5% you need to consider 1% as your expected rate of return, and you can even consider a 0.5% ROI as a success if you reach it in the early stages of your trading career.

Spend a decent amount of time on trading activities

Successful traders always keep track of their investments, as this is the best way to avoid surprises and be fully aware of what is happening with your money

If someone trades in the Forex market once every now and then, the trader is probably going to feel like they are missing out on a lot of money-making trades and is more likely to spend a lot of money in one market position, which is risky since they are placing all their eggs in one basket.

Thus, a trader’s average return on Forex trading is safer when someone trades several days in the week and is risking a reasonable amount of capital on every market position.

The Don'ts of Forex

Any trader can be easily driven to the Forex market because of the volatility, the volatility of its assets, the most volatile currency pairs, and many traders can rush into making decisions that are not rationally based.

If you want to achieve a sustainable income from Forex trading, then there are things you should avoid doing.

“The elements of good trading are (1) cutting losses, (2) cutting losses, and (3) cutting losses. If you can follow these three rules, you may have a chance.” - Ed Seykota

Do not trade emotionally

When a trader sees that their market position is losing, they get upset and decide to make a revenge trade to cover their losses.

The Forex success rates are high when a decision is based on rationality and logic, but emotional trading is more likely to pull success rates down the drain. 

Do not compare yourself to other traders

Every trader has their own strategy, their own capital, different average Forex returns, and what works for others might not work for you.

You should not compare your investment outcomes to the rich Forex traders who use hundreds of thousands of dollars to invest. Those wealthy traders can use $250,000 to trade and get a 5% return rate, which will generate $12,500 monthly. Just remember, you are not them, and even if you have $250,000 to trade with, your rate of return will be different from theirs.

Do not rush for mainstream trades

People sometimes follow trendy market opportunities, Bitcoin, Dogecoin, and other trends where almost every trader invested to increase their average returns without proper planning and analysis.

It might not be the best strategy to invest just because it looks good, or because every other trader is investing in the same asset or market.

FAQ on Realistic Forex Returns

How much do professional traders make?

Professional Forex traders are usually able to invest $100,000 in Forex, with a good rate of return, say 5%, they can generate $5,0000 monthly or $60,000 in the first year.

What is the best Forex trading strategy to have decent returns?

There is no strategy that can be called “the best strategy”. It all depends on the trader’s preference and the time a trader can dedicate to trading. 

Some prefer scalping, day trading, or swing trading, so any strategy works as long as it brings a positive return on investment.

Can Forex trading be my main income?

Yes, but only in the long-term, after several years of Forex trading and once your Forex annual return offsets your full-time job income, you can consider Forex trading your main income. 

What are the most profitable currency pairs in Forex?

EUR/USD remains one of the oldest and the most commonly traded currency pairs, since these two currencies shape today’s global economy, and historically there have been many fluctuations where traders gained millions just by trading this currency pair.

Another generally traded pair is USD/JPY since it represents two countries that are both global tech giants, so every technological advancement affects the volatility of this currency pair.