I’m sure you want to know *how much money can you make from forex trading*, right?

After all…

You’ve heard of traders making millions in the financial markets.

But here’s the thing:

You can’t compare yourself to them.

Why?

Because you’ve got different account size, risk appetite, risk management, trading strategy, and etc.

If you do so, it’s like comparing an apple with an orange (it’s silly).

That’s why I’ve written today’s post to explain how much money can you make from forex trading — with objective measures.

No more second guesses. No more ridiculous projections. No more illusions.

Just statistics, numbers, and the cold hard truth.

Ready?

Then let’s begin…

(Or if you prefer, you can watch this training below…)

**The most important metric in your trading career**

Here’s the thing:

You can have a 1 to 2 risk to reward on your trades. But if you only win 20% of the time, you will be a consistent loser.

Now obviously your risk to reward isn’t the answer. Then what is? Your win rate?

Let’s see…

Perhaps you have a 90% win rate. But if you lose $0.95 for every dollar you risk, you will also be a consistent loser.

So, what’s the solution?

Clearly, your risk to reward and win rate are meaningless on its own.

Well, the secret is this…

…you must combine both your win rate and risk to reward to determine your profitability in the long run.

And this is known as your **expectancy**.

Your expectancy will give you an expected return on every dollar you risk.

Mathematically it can be expressed as:

**E= [1+ (W/L)] x P – 1**

Where:

W means the size of your average wins

L means the size of your average loss

P means winning rate

Here’s an example:

You have made 10 trades. 6 were winning trades and 4 were losing trades. That means your percentage win ratio is 6/10 or 60%. If your six trades brought you a profit of $3,000, then your average win is $3,000/6 = $500. If your losses were only $1,600, then your average loss is $1,600/4 = $400.

Next, apply these figures to the expectancy formula:

E= [1+ (500/400)] x 0.6 – 1 = 0.35 or 35%.

In this example, the expectancy of your trading strategy is 35% (a positive expectancy). This means your trading strategy will return 35 cents for every dollar traded over the long term.

Let’s move on…

**Why you must play more to WIN more**

Have you realized this?

The majority of casinos operate 24 hours a day, 365 days a year. Why?

Because the more they play, the more they make — and it’s the same for trading.

You’re might wonder:

“How does this relate to trading?”

This means the frequency of your trades matter. The more trades you put on, the more money you’ll make (albeit having a positive expectancy).

Imagine this:

You have a forex trading strategy that wins 70% of the time, with an average of 1 to 3 risk to reward.

But here’s the thing…

…it only has 2 trading signals a year.

How much money can you make from this forex trading strategy?

Not a lot, right? Heck, you might even lose in that year since there’s a 9% chance of losing two trades in a row.

Can you see how important this is?

Now:

The frequency of your trades is important but it’s not enough to determine how much money you can make in forex trading.

There are still a few more factors that play a major role. Read on…

**Why money is the lifeblood of your Forex trading business **

You’ve probably heard of stories where a trader took a small account and trade it into millions within a short while.

But what you don’t hear is that for every trader that attempts it, thousands of other traders blow up their account.

So…

Let’s not treat trading as get a rich quick scheme. Instead, treat it as a business you’re looking to grow it steadily over time.

Now, let’s say you can generate 20% a year (on average).

With a $1000 account, you’re looking at an average of $200 per year.

On a $1m account, you’re looking at an average of $200,000 per year.

On a $10m account, you’re looking at an average of $2,000,000 per year.

This is the same strategy, same risk management, and same trader.

The only difference is the capital of your trading account.

Can you see my point?

Now…

That’s not to say you can only make 20% a year because, for a day or swing traders, the percentage could be higher (as you have more trading opportunities).

But no matter what strategy or system you’re using…

…the bottom line is you need money to make money in this business, period.

**Why your bet size determines how much you can make**

You’ve probably heard this before…

“The bigger you risk, the higher your returns.”

So is this true?

Well, yes and no.

**Here’s why I said yes…**

Let’s say your trading strategy has a positive expectancy and generates a return of 20R per year. Also, you have a decent size $100,000 trading account.

So, how much can you make from your trading?

Well, this depends on how much you’re risking per trade.

If you risk $1000, then you can make an average of $20,000 per year.

If you risk $3000, then you can make an average of $60,000 per year.

If you risk $5000, then you can make an average of $100,000 per year.

This is the same strategy, same account size, and same trader.

The only difference is your bet size (or risk per trade). The bigger you risk, the higher your returns.

Now…

**Here’s why I said no…**

If your bet size is too large, the risk of ruin becomes a possibility. This means you have a higher risk of blowing up your trading account — and it reduces your expected value.

If you want to understand the math behind it, go read this risk management article by Ed Seykota.

Moving on…

**Do you withdraw or compound your returns?**

If you make an average of 20% a year with a $10,000 account, after 20 years it will be worth… **$383,376.00.**

But what if you withdraw 50% of your profits each year?

This means you will make an average of 10% a year and after 20 years your account will be worth… **$67,275.00.**

Now clearly, compounding your returns will generate the highest return.

But whether it’s feasible or not depends on how you manage your trading business.

Here’s why…

If you’re a day-trader, then chances are trading is your only source of income. You have to withdraw from your account to meet your living needs.

But if you have a full-time job and you’re trading on the sides, then you don’t have to make any withdrawals and can compound the returns in your account.

Now…

There’s no right or wrong to this. Ultimately, you must know what you want out of your trading business — and understand how withdrawals will affect your returns over time.

**So, how much money can you make from Forex Trading?**

Now…

You’ve learned the key factors that determine how much money can you make from forex trading. Next, let’s see how to use this knowledge and calculate your potential earnings.

Here’s an example:

*Trading expectancy – 0.2 (or 20%)*

*Trading frequency – 200 trades per year*

*Account size – $10,000*

*Bet size – $100*

*Withdrawal – None*

Once you know your numbers, plug and play them into this formula…

**Trading expectancy * Trade frequency * Bet size**

And you get:

0.2 * $100 * $200 = $4000

This means you can expect to make an average of $4000 a year (with the above metrics).

Now if you want to convert to percentage terms, then use this modified formula…

**[Trading expectancy * Trade frequency * Bet size] / Account size**

And you get:

[0.2 * $100 * $200] / $10,000 = 40%This means you can expect to make an average of 40% a year.

**Bonus: How to massively increase your returns using the 9**^{th} wonder of the world

^{th}wonder of the world

At this point:

You’ve learned the formula to calculate how much you can earn from forex trading.

Now, you’ll learn a simple tip to help you massively increase your earnings without increasing your risk.

I call it the 9^{th} wonder of the world.

Here’s how it works…

Instead of only compounding your returns over time, you also add funds to your trading account regularly — and compound it.

Let me prove it to you…

Here’s an example:

If you have a $10,000 account and you earn an average of 20% a year.

After 20 years, you have… $383,376.

Not too shabby.

What but if you add funds to your account every year?

Let’s see…

If you have a $10,000 account earning an average of 20% a year, and you add $5000 to your account every year.

After 20 years, you have… $1,503,504.

Now we’re talking!

Can you see how powerful this is?

**Summary**

So, how much money can you make from forex trading?

Well, there’s no one factor that determines how much money you can make in forex trading.

Instead, you must look at these 5 metrics:

- Trading expectancy
- Trading frequency
- Account size
- Bet size
- Withdrawals

Then apply this formula… **Trading expectancy * Trade frequency * Bet size**

And you’ll have an objective measure of how much money you can make in forex trading.

Now, here’s my question for you…

How much do you expect to make from forex trading?

Leave a comment below and let me know.

It took me 4 years to understand this over and over again. Coz the market and charts somewhat deceiving…

Better late than never!

Thank you for this wonderful article. In fact, I figured out myself these 5 metrics in the past few months, but you have put it in a formula. That’s really cool. Thanks Rayner.

You’re welcome Peter!

Excellent and informative article Rayner. Thanks for sharing this knowledge.

The pleasure is mine, Tim

Great article! I remember when starting, i calculated to be a millionaire within 2 to 3 years… Hehe, well i still have a bit to go after X years of trading. I must say that your longer time frame approach really has helped me improving my results, since i have adopted your style of Forex trading as much as possible. Brgds and thx.

Gotland Trading.

Cheers Gotland

Superbly put.

Thanks Neil!

Hi Rayner from the time following your article which is “How to be a profitable Trader Within the next 180 Days “from the bigning of thise month july 2017 i made 16 trades which 11 winning and 5 lossing trades .and with tis article you wrote the winnig expectancy formula: i am doing well which is E = 0.17 or 17%.

Again Rayner i thanks you for you give me your exprence and trading formula even i will update you as my promise when the 180 day trade experment proformance after i finsh them.

with love

Amanuel

from swiss

Awesome to hear that! Keep me updated of your progress bud.

Hi Rayner

Wonderful article, thank you.

I just want to point out that, if set the size of the bet as a percentage of your account ( let say 2%) instead of fixed bet size, the result would be very much different.

Thank s

Yes, I would agree.

Hello Rayner,

Most of the time I trade in demo account and still not profitable, every 10 trades 8 lost and 2 win.

Presently my broker is FxPro.

This post here will help…

https://www.tradingwithrayner.com/profitable-trader/

Nice article again Raynor. Thanks for sharing !!

– Marzi

You’re welcome Marzi

Great article. You are right about the number of trades will help to increase total profitability, but traders must be mindful that every transaction costs money in spreads and slippages. A retail trader that make 4 trades positions a day, loses about US$100 to the brokers in spreads. So the expectancy calculation must include all those cost.

That’s a great point, Steven.

Won’t the “size of average wins” and “size of average loss” in the Expectancy formula take care of spreads and slippages ie assuming you are using the net amount for wins and losses ?

Yes if you do so.

Another excellent article, thanks Rayner!

I average 1 to 10 trades per day and use a risk of ruin calculator to compute my position size once weekly. My goal is to slowly increase my bet size and eventually make 1000k per day.

Nice, keep on going!

Hi Peter. Curious if you have reached your goal of 1k per day yet?

Another excellent and very informative article. Thanks you so much Rayner

The pleasure is mine buddy

Rayner, once gain Than You for the great article.

I have been looking at Risk:Reward as the means to being profitable.

I don’t trade that much my objective is $700.00 per month.

I will take this new information to help me reach that goal.

Once again

Thank You

Cheers William

I can’t keep the money with my broker. I will withdraw it monthly if there is a profit regardingless of how much. My inner evil will grow (greedy and superhero gut) and ruin the account.

Basically i feel i can only trade the money i am willing to lose, instead of growing it. So i prefer to deposit more money into the trading account when i am afforded to do so.

Yes. Totally agreed with the number of trades will increase the probability of profit if your winning rate is greater than losing. Eventually the losing trades will be covered by winning trades. But, sometime it will be a chance of drawdown and happen the opposite way.

Hence, remember to trade at the most crowdest zone..

Thanks.

YJ

Thanks for sharing YJ. Hope you found something that works out for you.

I was confused by the RRR measurement until I know how to use “expectancy” to evalute my trading.

And in this article you have put everything together with a formula. Great Job! Thanks Rayner.

Awesome to hear that, O!

Always enjoy reading your article.. simple English great explanations and illustrations on how and why. This really helps for a new learner. You answer many of my questions, thank you for the sharing.

I’m glad to hear that Lee.

Don’t hesitate to let me know if you’ve got any questions, I’ll be glad to help.

Hi Rayner,

Top Question and at the front of the queue with any new Trader.

The way I see it is im unlikely to have the kind of account size to earn a living from trading around my current job. BUT heres the thing, its about consistency! If you can become consistently profitable with a small account, you can be consistent with a larger account. Ok you might not have that money lying around but dont think about that, its not important. Whatever account size you have doesnt matter. Think consistency and nothing else.

Heres my point,

If you can trade consistently with a small account you can scale it up. ok get a journal and track record and approach a proprietary trading firm. Do for them what you do with your account and they will throw money at you and give you half of what you make them.

Consistently Profitable. If I had a trader working for me who could make say 10% profit month on month I would employ them and the more I gave them to trade the more Id make.

Rayner good post again bud.

I hope this take on it helps out.

Well said, Dave.

I totally agree.

Hi Rayner

Great post!!

For Trading expectancy * Trade frequency * Bet size

How to calculate if the bet size (which I assume is an amount) is not fixed, say 1% of funds in account that fluctuates from trade to trade?

Hey Zac

Just round it to the nearest number to make it easy on you.

Great post Rayner! When I first learned about expectancy it was like a light switch that went off. All of a sudden everything made sense to me, and I had much more confidence in my trading system. It does take time and practice to figure this out, but it’s a great area to focus on. Thanks again for your trading insights!

You’re welcome, Jay.

Glad to hear it’s helping. cheers bud

Hi Rayner nice to hear from you . I will make tonnes of money in Forex trading. for the next one year at least million dollars . I am not kidding. I have to make . if possible please guide me.

Thanks

Chandru

Great aspirations!

May be, it Will be worth if there social media like Telegram or others, so any viewers here can share intensively, it’s because need to enter email and etc when we want to comment this site here, need more times less efficienty and not effective i mean.and because i,ve any question also . 🙂

I don’t have telegram.

But I’ve got a facebook group here… https://www.facebook.com/groups/forextradingwithrayner/

fundamental is important wereas technical is useless

Hello sir, 20% in a year …….cannot we make more …my dreams is to be professional forex trader but 20% in a year not satisfy for me …because if we keep money in bank we get return 10.5% . Without any risk…please make it clear ….I expected 10% per month with low risk…

Then trading is not for you…

Hi , I think 20% per year is okay especially if you are a new bie to trading

If you don’t have well tested strategy and good risk management and you are in a learning curve then I think the advice is to go with 20 %,

Why? So that you can keep on learning and trading at the same time.

You see, I have account which started with a balance of $50,000 two weeks ago, and now I am seating with $100,000 which I made in 2 weeks.

If you don’t have trading schedule, good strategy, good risk management, a mentor, and lots of experience under your belt, then I prefer you go with the 20% per year from Rayner.

My advice is don’t rush for the money yet, go for proper education and mentor ship first .Build your experience for a couple of years.

Rdgs

Steven aka Sniper

Hi Steven! Care to mentor??

Thanks!

PSUALUM

Is being long a currency like being long a stock position… or does it expire after a period of time? is being short like being long a stock position or an option position ??

For spot forex, you can stay long for “unlimited” amount of time as long you have enough margin to meet the requirements.

Hi,

Clear article.

What is a reasonable expectancy though?

That is the question that I can’t find a proper answer to. And by reasonable I mean what do competent traders make?

I know that the answer will be a range but I’d love to know what that range is.

Aside from the obvious (how much money people can expect to make) it is also really important for the psychology of expectation management. If you’re making 20% per year and this is what most good traders make then you know you are doing something right. If most good traders make 100% then at 20% you are doing okay but not losing money – you know that you could find a better strategy.

There’s really no clear answer to this.

I would say making 20% a year consistently and risking 1% each trade would rank you as one of the best out there.

Great article Rayner, You make it so simple that even a layman can understand the complex term “forex trading”. I like your examples. Sometimes i laugh a little bit on those examples. Brilliant knowledge you have. Kudos

Hah, thank you.

forex is like formula 1, crypto seems safer lol

Lol

Great post. People should understand that and be more realistic. Maybe it is an influence from the “make money fast” sites and programs.

Well said bud

i’m a successful trader,I’ve been trading for 3 years now,i’m mostly 70%+ accurate on all the trades that i take,i only target moves with 1:5 to 1:20 risk:reward on the market.i risk 5% or lesser on every trade and i usually grow my account by 100-250% monthly.so what i think is that how much risk you should take should be based on the lowest performance you have on the Forex market,not according to these trading rules people write about online because i call that slow death if you’re a loser and slowest growth if you’re winning which makes you end up not successful but living the same kind of life as a person working 9-5 job.and honestly speaking Forex is the hardest thing compared to any job you’ll find out there.

Thank you for sharing.

Hi Tshilidzi. You mentioned that “Forex is the hardest thing compared to any job you’ll find out there”. Could you enlighten me and elaborate. Thanks.

The free signals in your telegram messages shows the contrary. risk:reward ~ 2:1

I don’t have any telegram.

I read your “How Much Money Can You Make from Forex Trading?” article, That has affected my mind very much. My knowledge store has further mitigated.

Recently, I read a “Forex Trading In India Legal” article, That is similar to what you write “How Much Money Can You Make from Forex Trading?” matter. I liked it very much.

cheers

I was in this trading for 2 years since 2014. I wasn’t successful. I lost everything I invested. But I believe that I can recover all that and for that I need your help to restart what I shut down almost 2 years ago. I am still hopeful for sucessful trading ahead. Thank you for this article.

You’re welcome!

Really its a very nice info. Thank you very much for this.

My sincere congratulations. Great content here, you have a nice writing style, and certainly wonderful that you are so well versed in this niche. I will definitely follow your work further.

I appreciate it, Rozina. cheers

Hi man, I’ve been your following your posts lately. I am just curious, how many traders do you do per day on average? I understand based on your post that you are a high-frequency trader since you always emphasize massive number of traders that a trader should do to win more.

I’m not a high-frequency trader. I’m a swing and position trader taking about 10-20 trades a month.

On that 10 swing trades monthly… do u risk 1% of capital per trade? And aim 2 or even 3? Thnaks

I risk 1% per trade.

That was helpful. 20% sounds pretty reasonable. I’ve regularly made that (and I’m a little new) – but I’ve also had those trades that undid everything I made because I didn’t set my risk limit properly. I’ll call those “educational expenses”

So, when you say you risk $1000 per trade, for example, is that the place you’ll set the stop loss? Or is that something different? I definitely need to get better at limiting my risk so I stay positive rather than having to build back to even over and over again 🙂

It means the loss of one trade will not be more than $1000.

This post will help with your risk management and position sizing

https://www.tradingwithrayner.com/forex-risk-management/

Hi Rayner, good article. But isnt it that “playing more to win more” is not quite applicable in Forex? Especially when you mentioned that you need to combine the favorable risk-reward ration of at least 1:2 and a good winning rate. Or perhaps you are referring this article to day traders or scalpers who executes plenty of trades a day? In my experience, there are less “quality” set-ups that can give high probability or at least qualify the risk-reward requirement, you need to wait and wait even longer, so with that, you cannot expect to have 100 trades in a month or not even 50, unless you will gamble all levels in the markets (which doesnt make any sense).

Pls enlighten. Or maybe you can specify what trading style are you referring to. Because for DAILY CHART TRADERS, trading a lot like 100 or 50 trades per month is very impossible. Unless you are a gambler or just randomly put trades with no edge at all. Thanks buddy!

…and by the way you mentioned about CASINO’s why they operate 24/7. It is very possible because Casino’s do not need to wait for their EDGE to appear. Their edge is already in place, like you are seeing a lot of confluent pin-bars or engulfing bars. But in Forex, you need to wait for your edge, and by the way, that edge should meet your favorable risk-reward ratio as well. So I dont really think you can trade a lot to win a lot. I dont even think you can do 50 trades in month or even in a quarter as Daily Chart swing trader, unless you are a scalper.

Thanks! 😉

Hey Dale

Not everyone trades off the daily timeframe.

The point I’m trying to make is you need to trade more in a shorter period of time if you want to see consistency quickly.

Or else, it’ll take months or even years if you have a low number of trades.

That’s why most full-time traders don’t trade off the daily timeframe because it takes too long for the law of large number to work in your favor.

For those trading to grow their wealth, then that’s another thing altogether.

20% a year?

With 1000 u got 200+ = 1200 at the end of year… this is far from true …. all of this guys should do backtesting their thing and see results after year…. its not 20% with 1:2 and 45% win rate

Its much much higher….. just be consistent

I want to explore Forex trade.

Sure go ahead.

A 20% success rate means the person isnt following the rules.

I enter 10 trades and I excute and profit 10 trades. I only enter

Into a trade where I have calculated 90% probability of making money.

Remember as soon as you enter your trade you have 90% probability .( once you confirmed All tests )

Every second /min /hour you stay in trade your probability heads down.

I just started trading live with real money. Into my second week now I am making $1000 day on a $50,000 account.

For me its a game. I follow all the rules. I test and confirm about 10 rules before each execution.

I suggest reading up on how crocodiles in wild target prey. That same mentality is exactly how to bag each profit target in forex. Watch, watch,watch then launch.

Thank you for sharing bud.

Would you be willing to share your 10 rules of Forex trading?

Check this out… https://www.tradingwithrayner.com/12-forex-trading-tips-that-work/

Well i expect to make atleast 50% of my account size anually. That’s cool for me.

Awesome.

Hi Rayner,

Do you have a private coaching program?

Enrolment is closed now. But you can join my email list and I’ll update you when it’s available.

well done Rayner as usual.

I work on around 20% a month, Im a full time trader…

Using your formula should help lots of newbies on this site.

Awesome to hear that, Martin!

You’re a gifted teacher

Cheers Jay

Another very good informative article thank you Mr Rayner with your teachings I have learned a lot

Awesome to hear that!

Over a million dollars

Nice!

can i know what platform are you using rayner?? thanks a lot for this wonderful information.

The charts are from TradingView.

Great article Rayner,

What fx trading platform would you recommend ?

I don’t publicly discuss brokers because in this day and age, we have no idea what goes on behind the scenes.

If you want a recommendation, drop me an email me and we can discuss it.

I want to make $20,000 trading income per quarter and withdraw $10,000 every quarter for my use.

How much should I invest in trading capital based at 1: 30 leverage and stop trading voluntarily when the margin level drops to allow Drawdown to take its own time and revert back to profit zone or hit Equity Loss point of 50% of the initial equity. Maximum open trades restricted to 18 positions or 36 mini lots. Outset Consecutive Loss: 15% of initial equity.

I am providing the actual latest statistics gathered by myfxbook.

I am a scalp trader. I never use Stop Loss and when capital is locked up in Drawdown I wait for the reversal to happen or liquidate trades when initial account equity crashes to 50%.

The statistics are based on Myfxbook analytics.

Trading period: 82 days.

Active: 50 days.

Inactive for 32 days because of drawdown and stop-out margin activated not allowing to trade further. Margin level had dropped to 140%.

Trading Expectancy is 12.3 pips (calculated by Myfxbook.com based on profits missed and drawdown even though I have no R:R planned.)

Gross TP before the commission, spreads, swap costs: 18 pips

Trading Frequency is 12 times (based on the active trading activity of 50 days)

and 7.5 times based on total trading activity which includes 32 days of inactive trading

Account Size: US$20,000

Bet size: 2 lots of mini (10k) contract

Lots traded: 127 or 2.54 average per day

Withdrawals: Every 4 months. 50% of profit and add 50% to trading capital.

Trading Strategy: Scalping for TP 18 gross pips (nett 12.3 pips after commission, spreads and margin funding costs )

Strategy for Adverse Trades: NO STOP Loss. Wait for Drawdown or Account Stop-Loss. Trading to stop if maximum trades cross 18 positions. There was no strategy for margin level% but after experiencing how the stop-out levels cripple trading, I want to stop trading when margin level % drops to 25% for each lot. So if 18 positions is the maximum permitted, the trading should stop when margin shrinks to 450% of the margin level. O

Maximum Drawdown: 41.26% .

Stop Loss: 50% of Initial Equity

Trading income (nett): 46.6% for 82 trading days (Jan 21, 2019 to May 15, 2019) . If calculate for yearly of 248 days trading then it becomes 186.64% per year.

For active trading days of 50 (year trading days fixed at 240 days) days, it becomes 223% per year.

Other Myfxbook statistics are as under:

Gain:+46.63%

Abs. Gain:+46.63%

Daily: 0.11%

Monthly: 9.51%

Drawdown: 41.26%

Balance: $30087.08

Equity: (100.00%) $30087.08

Highest: (Mar 26) $31970.72

Profit: $9567.96

Interest:-$2264.46

Trades: 602

Profitability: won 552 out of 602 (92%) ; Lost 50 out of 602 (8%)

Pips: 7365.4

Average Win: 15.79 pips / $27.27

Average Loss: -27.07 pips / -$109.72

Lots: 127.92

Commissions: -$832.66

Longs Won: (334/355) 94%

Shorts Won: (218/247) 88%

Best Trade($): (Mar 26) 153.20

Worst Trade($): (Mar 26) -927.68

Best Trade (Pips): (Feb 07) 58.0

Worst Trade (Pips): (Feb 07) -237.7

Avg. Trade Length: 2d

Profit Factor: 2.74

Standard Deviation: $68.52

Sharpe Ratio: 0.00

Z-Score (Probability): -16.18 (99.99%)

Expectancy: 12.2 Pips / $15.89

AHPR: 0.06%

GHPR: 0%

Thank you for sharing, Peejay!