One of the first questions beginner traders and investors ask is how much Forex traders can make per month. Everyone would like to know what they will have in exchange for their time and efforts, compared with other earning opportunities. Some expect that Forex will yield 100% per annum and more, and some are sceptical even about 30%. So, how much can a trader make for real？ Let's calculate together.
Imagine a classical market where goods are sold and bought. You can be a seller or a buyer there. For example, you buy something cheap and sell it high, and make money from that. What will your income level depend on？
Your start capital (the more goods you have, the higher your profit is)
Bank credit amount (you can take out a loan if you don't have enough money)
Asset liquidity and price volatility. The more people want to buy/sell your product, the faster you make trades. The faster the price changes, the more trades you can make in a unit of time.
The same applies to Forex, where traders also sell or buy goods, using leverage and taking volatility and liquidity into account. Here are two practical examples. Let's suppose the EURUSD is 1 to 2, and the euro is a base currency.
Example 1. You have a deposit of 2,000 USD. One lot is 100,000 units of the base currency .The minimum trade size set out in the account conditions is 0.01 lots or 1,000 base units, which equals 100% of your deposit (2,000 USD or 1,000 EUR). With 0.01 lots, the EUR/USD's one point cost is 0.1 USD or 10 cents for four-digit quotes (100,000 * 0.01 * 0.0001).
Thus, if your deposit is 2,000 USD and you open a trade worth 2,000 USD, one price variation step will yield you 10 cents if your forecast is correct.
An average currency fluctuation may go up to 80-100 points in a day based on the volatility calculator. So, you can make money from such fluctuations in any direction! According to surveys, beginner traders earn 100 points a day on average, making 10 USD per day.
Conclusion: a trader may earn 10 USD a day with a deposit of 2,000 USD if all goes right. That means monthly profitability will be 10% (10*20 business days = 200 USD).
However, this calculation doesn't provide for spreads and swaps that swallow a substantial part of profits. Second, there's a risk management rule that says a risk per trade mustn't exceed 2% of a deposit, whereas, in my example, the risk totals 100%! Third, a trader doesn't always make profits. With a deposit of 1,000 USD and without leverage, a trader won't have enough funds to open a trade because 0.01 standard lots is 2,000 USD when the rate is 1:2. The real rate being 1.1066, the minimum trade amount without leverage will be 1,106 USD.
Conclusion:
With a deposit of 2,000 USD and 100 points earned a day, you can earn 200 USD (2 * 100). That makes about 4,000 USD or 200% a month.
You risk only 2% of the deposit, so the risk per trade is 40 USD.
Those are quite optimistic figures, but you need to subtract spreads, swaps, previous losses, and withdrawal fees to calculate net profits. Also, remember that using leverage without observing risk management rules will most probably induce stop-outs.
There isn't any “easy” money on Forex. Experienced traders who earn a lot in the foreign exchange market approach trading with all responsibility: they optimize their trading strategies and thoroughly study financial instruments and the trading platform's features. If you want to earn much, use the following algorithm:
Start simple. Make sure your net monthly profit is at least 3%-5% of your investment in a real account on a stable basis. It doesn't matter how much it makes as a money equivalent. What matters is your trading system's stability and risk optimization.
Lets sum up.
Your profit amount is subject to the following factors:
The sum of the deposit that you use in trading. Remember about risk management rules.
Leverage. You can increase your trade size by 10, 100, or even 200 times. However, don't forget about stop-outs.
Trading strategy (how often you open trades, Take-Profit levels, etc.)
Your willingness to learn, your patience, experience, and self-confidence!
How much do Forex traders make in three months？ It all depends on you: your willingness to risk and the time you're ready to spend trading. Sky's the limit! So, make a table based on the previous calculations and set your goals yourself!
Everyone can earn as much!