Forex Trading - Know Your Risk and Reward

We know that trading Forex, the returns can be good and fast.  This also means the risk is high.  For people who do not know what is required, this is bad.

There are a lot of gimmicks adverts selling you the idea that you can turn $2K into $100K in a few months time.  Do you think that is practical?

I would use a 10K capital as an illustration.  Assuming, you know you have to be prudent and you have a trading strategy and couple with your own trading maturity, you are able to achieve consistent 70% winning rate.  As shown, to grow from 10K to 20K, you would still need 27 trading days (1.5 months)

Assumptions:

• 2 trades a day
• each trade, maximum risk is 45pips
• each trade, return is 1:2, 90pips (consistently)
• chances of winning for each trade is 70%

The assumptions assumed you can be 100% in your performance, but in reality we know this is not going to happen.  You may not have the time to put in 2 trades a day and it also depends your strategies if they give you the signals.  When you are about to put in the trade, the risk may be higher than 45pips and you may have to give it up.  When you are in the trade, you don't necessary get the optimal profits every time (probably even less than 20% of the time).  The good news is, you can train yourself to access 70% winning rate whenever you put in a trade.

Thus, with these considerations, to grow your 10K capital to 20K, you would need considerable amount of time.  So, my friends, do not believe in those gimmicks.  Invest in yourself, learn how to trade properly.  Find the right sources and right mentors to learn from.  Trading is a long journey.

My purpose of writing this is to help you to set the right expectations and I wish you successful in your trading career.  Good luck!