Setting realistic trading revenue goals is a tough question to answer because there are so many factors. Each Trader is different, and the reality is that most traders lose money. The reason is that trading is tough and it takes real effort and discipline to be successful.
It is also impossible to find out what the best independent traders make because only a few people share that information and those that do, may or may not be telling the truth.
We will start by looking at some independent forex trader salary public data available on the internet:
How much does a Foreign Exchange Trader III make? The median annual Foreign Exchange Trader III salary is $166,461, as of March 31, 2017, with a range usually between $130,000-$194,728. However, this can vary widely depending on a variety of factors. Our team of Certified Compensation Professionals has analyzed survey data collected from thousands of HR departments at companies of all sizes and industries to present this range of annual salaries for people with the job title Foreign Exchange Trader III in the United States.
This professional forex trader income makes, not the retail traders who work from home.
How much can you make Trading the Forex Market?
There is no Limit on how much you can make! You can make millions of dollars. Anything is possible which is why so many people try to learn how to trade.
WAIT! Forex Income Is Challenging:
Before you get crazy here and start throwing loads of cash into a trading account. I need to tell you that, only a few people get rich trading retail forex, it is difficult, and you must be a master of trading and discipline to make a significant amount of money.
We could play the scenario’s all day long which is the reason a lot of people get into Forex Trading in the First Place. They see the possibilities of millions of dollars as what is possible and next thing you know they have lost several thousand dollars trading because they trade without knowing what they are doing and lack of discipline.
Realistic Trading Income Calculations:
So let’s calculate realistic numbers regarding profit potential.
The first thing you have to realize is that the use of leverage in trading is an excellent way to maximize gains and risk can be managed fairly well, if you have the discipline. That is the problem though is most people do not have the discipline.
But for the sake of this article, I am going to assume you have the trading discipline and have the ability to follow a forex trading income; risk management plan.
The great thing is you do not have to risk much to make a substantial profit. Let me give you an example.
You have an account of 10k, and you want to earn 2.5% per month with a goal of 30% account growth per year.
Now you decide that you are only going to risk 1% of that account per trade.
At 1% risk of 10k that is $100 USD, and therefore you are only risking 1% at any given time, and you could potentially earn the 30% growth by never risking more than $100 at one time.
Now there are many more numbers that must be calculated such as what is your win rate, what is the risk to reward ratio. So the scenarios could go on and on forever.
You could, in fact, raise your risk to 2.5% or $250 and hit your goal with a single trade and meet our monthly goal by using a risk/reward ratio of 1:1.
Forex Income Compared to Real Estate Income
Compare that with something real estate where someone might have to risk a great deal more to achieve the 2.5% gain. For example, you could spend 100k or more purchasing a house, and in trading, you can earn 2.5% with a much smaller investment by opening an account for as little as 1000.
You could potentially make 2.5% on one trade verses a lot more upfront money and time involved in real estate investment.
That’s the only trade you would have to make that month in order gain what you would be averaging in Real Estate to be considered extremely profitable. The conclusion is simple: Forex has such an incredible potential, that it can easily surpass Real Estate even with minimal risk measures in place.
I cannot think of many investments that yield anywhere near 100% ROI a year. Let’s take a look and see how hard it would be to make this with minimal to moderate risk management. It comes out to 6% a month compounding. Now that, my friend, is more than doable in this market. If you are confident in your profitability as a trader and willing to risk, say 3% of your account on each trade, then with an RR of 1:2 you could easily achieve this percentage with one trade in a month
Forex is an excellent investment IF you take it slow and focus on the long term.
What is the average forex trader salary?
I would like to compare Forex Vs Average and above average careers.
Now, looking at the average income per capita (person) in the U.S. The average Income per capita in 2015 was $58,714 via Wikipedia.
Let us imagine that you would like to make at least $50,000 a year trading. After all, you’re doing this for the money, so you want to make as much as possible.
Once again using minimal-moderate risk, we said you could accumulate 8% a month.
Assuming that you increase your lot sizes with your account each month, instead of weekly or daily for risk management purposes. You would need to have a $40,000 account to make $53,265.56 a year at 8% a month.
Now let’s say you minimized your expenses and worked a job, so you were able to build your trading account. How long would it take you to make 1 million off of a $10,000 account at 10% ROI a month? In 4 years you would have $970,000. Divide that by 4, and you get $242,500. Which means that you made $242,500 annually. That is if you did not pull any out, instead let your account build at 10% ROI each month.
What if you wanted to wait until five years and then start pulling out all of your profits. In 5 years you would have $3,044,816. Now you can feel free to pull out all of the profits each month, that would mean you would make $304,481 a month! Just imagine that. If you build up your 10k account for five years, you will be making $3,653,779 a year after that if you pull out all of your earnings. So we see that it is much better to build up your account until you feel you NEED to take the money out. I mean, can you imagine making that kind of an income five years from now every month. I am not even talking about something that is unachievable. 10% a month is possible in Forex by finding a great trading system, having proper discipline, finding a trading mentor, and keeping yourself in check every day, and perfecting your craft each and every day by educating yourself.
In fact, 10% per month can be accomplished with only a few high-quality trades each month; many traders get caught up in quantity instead of the quality of trades. We have a forex trading income calculator on this site to help you do your calculations.
I would challenge you to find another career in the world that will have you earning that kind of money in 5 years. I mean, honestly, those numbers are mind blowing, Remember though don’t get caught up in the figures. Trading isn’t easy but can be done, if you follow a plan.
I say this simply to reinforce how profitable the Forex market can be if you work hard, and have long-term goals in mind.
You really can make Great Income in Forex
In conclusion, if we can maintain a realistic view of Forex then we have a greater chance of setting reasonable goals and maintaining a profitable trading strategy that brings us a steady Forex income over time.
“Nothing can stop the man with the right mental attitude from achieving his goal; nothing on earth can help the man with the wrong mental attitude. -Thomas Jefferson
Casey Stubbs is the founder of Winners Edge Trading, which is one of the most widely read forex sites on the web.
Winners Edge Trading has trained thousands of people to trade the Forex markets.
Winner’s Edge Trading, as seen on: