Trading Forex: A Long Term View (…and not being too hard on yourself!)

Filed under: Learn Forex Trading |

 

It is easy, when enter the world of forex trading, to go in expecting to make 100% (or more!) returns per year and becoming rich beyond your wildest dreams. However, this is a dangerous attitude to take. It promotes excessive risk taking and poor money management.

 

Personally, in my first year of trading forex, I made gains of 33% on my trading capital. Now, while I was hoping for more than this, you have to have a pragmatic attitude. 33% is a lot better than most professional money managers make. Some of them do a lot worse. 33% is certainly better than rental property ROIs; and it is much better than government bonds or the paltry interest rates on savings accounts. In summary, 33% is pretty damned good – and we have no right to be disappointed with such returns.

 

Now, 33% might not get us rich quick, but if we can build our bank up slowly, it could soon start to add up. Let’s say we start with a trading bank of 10,000 GBP. After five years, our 10,000 would have risen to over 40,000 GBP (with compound interest). Not bad. After ten years, it would have risen to over 173,000 GBP. Still not getting us rich, but from here on in, things start to get interesting. After fifteen years, we are up to 720,000 GBP, and after twenty years, we are close to three million pounds! Not a bad result for gains of 33% per year, starting with a bank of 10,000 GBP! I think we all would take that.

 

This of course, is all theoretical, but the purpose is just to show you that relatively modest gains can still grow if you stick with it. To begin with, why not just have an aim of making more than you make in your savings account – with anything more being a bonus. This will take the pressure off of your trading and allow you to focus more on the task in hand.

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