Updated: Aug 27
To be less emotional when trading requires you to have a high win ratio, the more you lose the more mistakes you will make…the more you lose, its a feedback loop.
The average monthly return trading Forex is generally negative. The Forex market is all about borrowed money. So a monthly return really depends on how much you borrow against your account size, the cost of that borrowed money is called the swap rate. The swap rate is calculated daily and costs triple one day a week, this is how the brokers make their money, they are in the lending money business.
So with an account size of $1000 or a large account size does not matter. If you trade a micro lot size which is $1000 you have a leveraged ratio of 1:1 (based on your account size of $1000) the broker will charge you interest on $999 of that trade daily. Depending on the pair and trade direction you may receive or pay interest daily, the interest rate will vary depending on the pair.
As you can see we haven’t even developed a winning strategy yet and we are on the back foot with interest payments. Brokers are very happy for you to be a winning trader because the more money you make the more you borrow and they charge interest on a larger amount of money (Win / Win) There is more to learn about the back end of the broker business but I will keep it simple.
Now let us assume you have developed a winning strategy that has overcome the cost of trading Forex. What is the best time to start withdrawing profits? Realistically looking long term I would say you will make about 1.5% a month so you will want to compound that return. After 30 years your account will be $212,703.78 with an annual return of $34,801.01 Based on a starting capital of $1000 that is a very impressive return per annum. Depending on your financial goals plan accordingly.
Now the elephant in the room……how do you develop a successful trading system where you won’t become emotional and destroy your profits? I am extremely confident you will struggle to achieve that goal but fortunately, I have an automated solution for you, RagingBullFX.