How Much Money Can You Make from Forex Trading?

I’m sure you want to know how much money can you make from forex trading or what is the average forex trader income, right?

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

But here’s the thing:

You can’t compare yourself to them.

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.

Then let’s begin…

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

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.

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.

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.

And if you have a high-frequency trading strategy that makes an average of 1-2 trades per day, then you could keep your expectancy in mind that when you place 1-2 trades per day, you are making 70 cents of forex trading profit per day.

I’ll discuss frequency more in the next section.

So 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).

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?

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…

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.

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.

Can you see my point?

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.

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.

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.

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?

How much can you make from forex trading by then?

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 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.

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?

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 to determine how much can you make trading forex.

Here’s an example:

Trading expectancy – 0.2 (or 20%)

Account size – \$10,000.

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

0.2 * 200 * \$100 = \$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…

[0.2 * 200 * \$100]/\$10,000 = 40%

This means you can expect to make an average of 40% a year.

So now let me ask you…

Given that you have an edge, of course!

How much do you need to get started on Forex Trading?

While there are brokers which don’t need you to deposit a minimum amount to get started with Forex trading…

This is how the math works out (on most brokers):

Minimum size is 1 micro-lot: 1,000 units Transaction cost: Average 3 pips (which is about 30 cents)

Now let’s take for example:

You want to go long on 1,000 units of EUR/USD.

Since each pip is worth 10 cents, this equates to a risk of \$5.

After adding transaction cost, your total risk is \$5 + 30 cents = \$5.30.

(Notice that the transaction cost also takes up a fraction of your risk per trade.)

So by starting with at least \$500…

You’ll keep your risk per trade constant – at 1 to 2% each.

Then let’s move on…

Bonus: How to massively increase your returns using the 9 th wonder of the world.

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

I call it the 9 th wonder of the world.

Here’s how it works…

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.

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:

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?

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jason says:

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

Rayner says:

Better late than never!

Ben says:

Can I earn big money using small capital.

godfrey johny ssebabi bahi says:

I have not met a genuine trader telling the truth for free ….u r inspiring many newbies in trading…thank u God bless u Rayner.

Peter Wong says:

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.

Rayner says:

You’re welcome Peter!

John Zawa says:

Have been tutorials a lot boss it has helped me more every time I do I need to discuss some things with u.

tim says:

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

Rayner says:

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.

Rayner says:

Cheers Gotland.

Neil says:

Superbly put.

Rayner says:

Thanks Neil!

Amanuel says:

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 2022 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.

Rayner says:

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

Sina says:

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.

Rayner says:

Yes, I would agree.

Reynaldo says:

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.

Rayner says:

Marzi says:

Nice article again Raynor. Thanks for sharing !! – Marzi.

Rayner says:

You’re welcome Marzi.

Steven Loh says:

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.

Rayner says:

That’s a great point, Steven.

Fong says:

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 ?

Rayner says:

Yes if you do so.

peter says:

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.

Rayner says:

Nice, keep on going!

Mike says:

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

Rameshrao says:

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

Rayner says:

The pleasure is mine buddy.

William says:

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.

Rayner says:

Cheers William.

YJ says:

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.

Rayner says:

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

O Utan says:

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.

Rayner says:

Awesome to hear that, O!

Lee choon moi says:

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.

Rayner says:

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.

Dave uk says:

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.

Rayner says:

Well said, Dave. I totally agree.

Zac says:

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?

Rayner says:

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

Jay says:

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!

Rayner says:

You’re welcome, Jay. Glad to hear it’s helping. cheers bud.

Chandru says:

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.

Rayner says:

Great aspirations!

Algha says:

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 . ��

Rayner says:

Berita Ekonomi Asia says:

fundamental is important wereas technical is useless.

Shabir bhat says:

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…

Rayner says:

Then trading is not for you…

Michale says:

Hello there you said about 40 percent a year i was aiming for 5 to 6% a month 60 to 72 a year is that possible? And am not talking about a newbie am talking if i had abount 3 years experience to make 60 to 72 percent and if i read about 20 books and a hundred plus videos and determination patience and all am going to put effort into it.

STEVEN says:

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.

PSUAlUM says:

Hi Steven! Care to mentor?? Thanks! PSUALUM.

Joyce says:

Good Idea brother lesson first and slow movement towards a settled goal…. Plus they say.. Learn first then earn later.. big advice to us beginners so great.. Thanks.

mario says:

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 ??

Rayner says:

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

Ed says:

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.

Rayner says:

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.

Prince says:

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.

Rayner says:

Hah, thank you.

alex says:

forex is like formula 1, crypto seems safer lol.

Rayner says:

Forex says:

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

Rayner says:

Well said bud.

Tshilidzi Loveson Tshivhenga says:

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.

Rayner says:

Thank you for sharing.

Fong says:

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.

Andre says:

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

Rayner says:

I don’t have any telegram.

Narayan giri says:

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.

Rayner says:

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.

Rayner says:

You’re welcome!

Rozina says:

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.

Rayner says:

I appreciate it, Rozina. cheers.

David Brennan says:

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.

Rayner says:

Money says:

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

Rayner says:

Lily says:

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 ��

Rayner says:

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/

Dale Kevin says:

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!

Dale Kevin says:

…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! ��

Rayner says:

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.

Ivan says:

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.

Ivan says:

Its much much higher….. just be consistent.

I want to explore Forex trade.

Rayner says:

Rayner says:

Thank you for sharing bud.

Forex wannabe says:

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

Rayner says:

James says:

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

Rayner says:

Josphat says:

Hi Rayner, Do you have a private coaching program?

Rayner says:

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

Martin says:

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.

Rayner says:

Awesome to hear that, Martin!

Jay says:

Rayner says:

Cheers Jay.

Mike Michaelz Malata says:

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

Rayner says:

Awesome to hear that!

Ifeoma Ogoegbunam says:

Over a million dollars.

Rayner says:

bobie says:

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

Rayner says:

Sebastien Martel says:

Great article Rayner, What fx trading platform would you recommend ?

Rayner says:

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.

Peejay Lal says: