How Much Money Can You Make?

Here are some variables to consider:

• Maximum percentage of total equity on each trade
  • How much % of your capital will you lose per potential loss?
• Your initial trading capital
• Risk/reward ratio
  • For example, your average win is 30 pips and your average loss is 60 pips, your r/r ratio is 2:1.
• Number of winning and losing trades per month
• Number of profitable months in a year
• Number of years the trading account is compounded

If you are profitable in the first year, that profit will be added to your initial trading account, and assuming that you make a positive ROI (return on investment) in year 2 again, that amount will be compounded. Then select the number of years that you are able to keep up with this trading consistency based on the variables that you have set, and click the ‘calculate’ button. If you play around with the variables, you will realise that there are many ways of becoming profitable.

Many forex educators recommend that your risk:reward ratio be at least 1:2 so that your overall profits are likely to be higher than your overall losses. We find this to be over-simplistic because it takes just one factor into account. You can still come out profitable if your average loss is bigger than your average win. That will depend on the probability of a winning trade and on your position size. You can plan around how many trades you want to trade, and aim how much profit or loss you are willing to take in order to turn out positive. Take sensible small steps instead of risky huge steps, and you will be eternally thankful for that.

This calculator is only a rough guide, and the method contains many assumptions and variables. It does not promise anything nor guarantee you any results at all, nor is it a true representation of your future performance.