What Is The Average Monthly Return of a Forex Trader in The Top 10%

What is the average monthly return of a forex trader in the top 10%?… and Who are they?…. I don’t think there is such stats available. If you’re talking about the average monthly return over a few years, I don’t believe it’s higher than 10%. And the more years you add, it tends to go lower.

There is very little incentive these days for every day hedgefunds to engage in currency trading.


I will tell you why…

The forex market is largely traded by the banking institutions, who are either making money dealing on behalf of large commercial clients or acting as prime brokers to the smaller brokers, who are all looking for commissions.

Leverage rules have changed in the US so this means that even in the States it looks very unattractive. There is a massive Vanilla Options market in the interbank space as well which banks tend to engage in. Commercials engage in hedging practices in the futures market which some will argue is a better alternative to the manipulated spot market.

Most large hedgefunds would rather invest in stocks or trade futures it is easier to explain that you lost money on Tesco because the accountant did something dodgy rather than having to say you lost money swapping the Dollar for the Euro.

There is also the fact that the volatility in the stock market is more playable, a stock can move easily 10 points in a single day, a 10,000 share holding in Microsoft at $40 can be $50 next week meaning a $400,000 investment could make a tidy $100,000 gain in just a week if an investor bought at the right time.

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Don’t Care About Returns

To make the same amount, with volatility averaging 200-300 pips on most currencies in a week, you will need the equivalent exposure of £5,000,000 on a no margin trade, if the trade was margined you will still need a sizeable account to prevent your fund being over leveraged.

The risk does not justify the gains. As a consequence, 3% of a portfolio could be forex in most cases 0%.

Forex is largely retail, the smaller less volatile movements can easily appease a small trader ($25,000 – $1,000,000), a tidy week to week income, the high commissions and spread costs will not have the same impact on retail trading.

The retail market in the UK is roughly about £300bn daily in volume traded.

This is all regular people money.

The remaining 4 point something trillion is banking and commercial money. So in truth there is no special 10% there is just you and the other guy doing a bit better than you because he has more capital.

A lot of people will quit trading within a few years as they can’t find the time or money to dedicate to making it a success, others are simply escaping social norms and stigmas, especially when they are not making millions.

If you take it seriously you will make cash and you won’t care about returns, you just add up what ever it is you made.

There are 270 trading days on average in the year, if you managed to make $8 everyday net of commissions and the invisible spread on a mere $1,000 account, this will mean a mere 20 ticks net (irrespective of number of trades) at roughly $0.40 per tick (less than 10,000 base position). You would have earned $2160 for the year which is a staggering over 200% gain for the year.

The snag is no one wants to trade for $8 a day for 270 days but no one has capital to trade for $800 but all want to make money.

This is why very few people will make money…

Everyone wanting to trade forex is broke and everyone with the capital to do it, have bigger fish to fry. So all into context forex is only worth trading if you are prepared to do it seriously and are willing to make the equivalent of $8 a day for 270 days religiously.

There you have it!… No 10%, that’s why you can’t find them.

You can make a living from forex trading but getting rich will have to come with time. Sorry to disappoint. It’s the truth….

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