How much one can really earn investing in Forex? This and similar issues concern traders who are planning to use their finances to take profits in Forex. Arising of such questions is natural and regular, because all people want to know what income they can get as a result of their work and choose the best options for earning, investors in this respect are not the exception. Modern way of making profit in Forex is social trading, where some traders can use other traders’ practical skills and experience, just copying transactions in this service.
Let’s consider in more detail, how much income investment in Forex can return.
According to the data of the social investing service, investors’ total return of 40-70% is considered to be a good result.
Moreover, investors can return up to 100-150% of their investment per month. Traders’ performance depends on the trading aggressiveness and the leverage amount. As practice shows, the profit of a trader who sticks to an aggressive trading style with a large amount of leverage can exceed 100% of investment amount within a few months. On the contrary, the profit of a trader, who trades conservatively with small amount of leverage and short stops, approaches 30-40% annual interest. The second tactics is aimed primarily at long-term trading and drawdowns in the account which do not exceed 30 %. That is, a possible loss in the accounts with conservative trading tactics does not exceed one third of the total invested sum.
To improve the investment profitability, successful traders do tricks; they chose for copying not one but several traders with different trading practice.
Copying a few traders simultaneously significantly reduces the risks and stabilizes a trader-investor’s income. As the investor’s funds are distributed in a few accounts with activated transactions duplicating function in the social investing service, so a drawdown in one account can be compensated by high profits in another. Thus, the yields graph of a trader who copies transactions, duplicator, is smoothed. A duplicator can choose traders, providing trading signals or providers, basing on the open online monitoring data.
There are some more successful traders’ tricks to raise the profits in the transaction copying system:
- There is an opinion that it is better to copy the accounts which have existed for more than a year. Success and high performance of the accounts with the trading history of less than a year are often attributed to the favourable market accounts. Longer work of a managing trader indicates a good trading system, which turns them profits and, therefore, is profitable for their investors.
- It is always safer to duplicate the transactions of a trader, who follows the money management system rules and always sets protection stop orders. Such tactics is sensible and limits a possible loss to the minimum.
- Duplicators should develop a habit to withdraw their profit from the account every month or any other period. To do this, it's enough to decide on the trading balance amount. Such a good habit will help a duplicator to safe the profit and minimize the risks.
Following these simple rules increases a trader’s chances to return steady profits in social trading. The examples of the traders whose trading accounts haven’t returned expected profits are mostly related to non-compliance with these rules. In any way of Forex trading one should remember about the system of effective capital and risk management, chose the transactions provider carefully and wisely diversify the funds in accounts with different providers.
Today we can assert that investing Forex returns more profits than investing into bank accounts, stocks and bonds.
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The content of this article reflects the author’s opinion and does not necessarily reflect the official position of LiteForex. The material published on this page is provided for informational purposes only and should not be considered as the provision of investment advice for the purposes of Directive 2004/39/EC.