How big do you like your "Forex"...are your eyes to big for your pocket?

When I tell people that I look to achieve an average 3% return on trading monthly, the conservative people say that is high...it can't be achieved and the others say it's too little I'm looking to achieve much more. So what do you think...

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is 3% profit per month - too much,

or too little on Forex?

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Well, the thing is most people think about forex in terms of return only, without understanding all the components that makes forex possible in order to achieve returns higher than financial institutions.

The most important thing about trading forex is not the return but the risk. The risk is the one component that determines whether you are able to conserve your capital when having bad trades...cause you gonna have bad trades. When trading to risk 10% for example, you must understand that the impact on your trading capital is not just the 10% but the added impact of your trade potentially moving against you. So if you are not able to manage your trades effectively then you are gonna lose more than just the 10%

So for me the only safe risk is 1% of margin, no matter what the capital amount is. This ensures that the chances of the account being wiped out are so much less. In addition to that I don't trade with a stop loss or take profit… I can hear what you thinking...this guy must be crazy but I assure you I'm not. There are a couple of things that you need to keep in mind when trying to achieve your trading goals. One, you must know when to take profit when it's on the table and two, you must be able to manage your losing trades. Now for most people is easy to take the profit but managing losing trades is something that most traders don't even consider.

Stop losses are not a good tool

for managing losing trades

because you never know where

to place it.

I remember posting something about this just the other day. This is why I use hedging, it helps me to reduce the potential lose and this helps me achieve my goal when trading. to prove my point, I had someone with me last week who said he opened a position and placed his stop loss and a couple of minutes later moved the stop, and then moved it some more, and then again. That is not managing your loses effectively at all.

Lastly you need to have a strategy that is simple, which can be executed without any hesitation. If you have all these components you are assured that higher than industry returns are possible. All you have to do is be sure to stay away from people proclaiming that there system or indicator can achieve 100% in a short time...because that's impossible. Bigger returns, bigger risk!

So don't get excited about the huge returns you could possible achieve but asked yourself what the true risk is when it comes to money and risk management. Once you understand the discipline of trading then you will ask the right questions to know if your investment into the forex industry has a satisfactory risk and therefore can achieve realistic returns.