Nobody becomes an engineer, a doctor, or a chartered accountant in a few months. It takes a lot of time to learn and then gain experience to become successful. So, it’s quite unrealistic to expect overnight success in Forex trading. Similar to other professions or businesses, it will require time to master the markets and become profitable in them.
Unrealistic expectations regarding trading may do worse than good as traders can commit mistakes while trying to achieve their unrealistic targets. Let’s discuss the topic and try to figure out what is realistic when it comes to forex trading.
Unrealistic expectations are those expectations disconnected from what is real and achievable consistently, in terms of results or time commitment required to succeed.
Expectations in forex should be judged with different variables: account size, the timeframe to become successful, and your trading abilities.
Most traders start their forex trading journey with small account size, but they expect to pay all their expenses through the potential income earned from forex trading. This is not quite possible because making big profits in a week or a month could happen but making a consistent profit is different. For example, if your monthly expenses are $500 and your starting capital in forex is $1000, so you’re expecting to make a 50% profit a month. This is an unrealistic expectation and may eventually fail.
Similarly, you cannot expect to become a highly skilled and successful trader with a few months of learning and practice. You always need adequate time to learn the basics, build your strategy, test it, and practice it before you even start live trading. Once trading live, the learning circle starts again. There is simply no shortcut to this process, no overnight success, and no holy grail to become rich quick. Expecting success in less than one year from the day you start trading is simply unrealistic.
Last, your trading abilities matter a lot in your success. You have to accept your trading weaknesses, whether they come from your trading method, trading psychology, or money management. Take enough time to carve your trading strategy, learn more, fix the weaknesses, and test for adequate time, so you become confident of your skills and abilities. As in everything, some people will be more talented in trading than others. It is important to accept that fact and that your benchmarks should be set according to yourself and not trying to compare yourself to other traders.
There are two sources of unrealistic expectations, internal and external.
Unfortunately, the Forex industry has been filled with fake gurus and scammers who lure the noobs and non-traders to buy their services. They pose themselves as successful traders who multiply their equity in no time. Meanwhile, the reality is quite different.
Moreover, some traders share their successful trades on social media, where they show making handsome returns. This influences the new traders, and they become ambitious to make such profits without realizing that those traders may have the big capital size, or might only be showing winning trades while they may be hiding their losses.
All above are external sources.
In terms of internal sources, a factor that urges traders to trade more or take significant risks is their desire to make money fast. There is no harm in such a passion, but the large risks will eventually play against the trader’s performance.
Forex trading has no entry and starting filters. Anyone can open a trading account and start trading. That is the main reason why most traders fail. They are not well informed, and they believe in the catchy ads that lure them into the business with no knowledge of the real situation.
Nobody in the world would jump into building a house by themselves after watching a few youtube videos, but a lot of people risk their own money in the markets with zero preparation or understanding. They are mostly misinformed by so-called forex mentors, signal sellers, account managers, and copy traders.
Most successful traders worldwide make 3 – 6 % a month, but new traders are told that they would double their equity in a few weeks. Any information must be researched from independent resources before trusting. Otherwise, the result would be mostly wrong.
In forex, investing in any venture, or starting any business should be started with proper research. The approach should be conservative so that you may conserve your resources when the worst happens. The ROI in forex catches the attention of most traders. For most traders, making 50% or more in a month looks appealing. However, such traders should check the myfxbook or mql profile of successful traders to see their drawdown and monthly gains. You’ll see that most successful traders make on average 3 – 6% profit a month, then a noob should not dream to make a lot more than that.
Making big profits is the least important, while the vital thing is to stay above breakeven and make consistent returns. If a trader makes 25% in one month followed by 5% in the next month and then followed by 15%, it is considered an inconsistent trader as the gains fluctuate a lot, and accordingly, the drawdown would be high.
Hence, your performance benchmark should be your drawdown that must be kept low. You should try to keep it in single-digit while if your profit stays above the breakeven, consider yourself successful.
Most unrealistic expectations come from social media, and some of the traders around you lie or conceal their real trading results. Therefore, you should skip such sources and only focus on your learning, practice, and trading.
If you want some inspiration, then search myfxbook and mql profiles of traders, and you’ll see that most of the consistent traders who keep making money over multi-years usually earn single-digit income (in terms of percentage). Also, keep in mind that most successful traders think in terms of percentage gain and not absolute gain. So, it would help if you readjusted your expectations according to the size of your capital. Those who take big risks may become successful in a month, but they may lose all in a matter of a day.
You should build realistic expectations in forex trading by avoiding any ambitious target or thinking of becoming rich quickly. Anything around 5% monthly is realistic and achievable and will make you fortunes in the long run.
To overcome the account size challenge you can apply to trade a firm’s capital and become a funded trader. The5ers is a great option for this.
Your risk allocation depends on your risk tolerance and trading ability. Get to know it and respect it. With practice and effort, you will eventually become a better trader. Remember it is a process.
Another essential variable is your availability for trading. If you have ample time every day, you can become a day trader and find multiple trading opportunities. which will give you more setups to learn from and capitalize. With less time available, you will have less setups to trade, and therefore, less opportunities to capitalize. This is also fine, respect your own time availability and don’t rush or push your system.
There are scores of factors in becoming a successful trader. While forex is not a get rich quick scheme, no unrealistic expectations can do good to you. You may need to shed off these expectations that you attain from social media or external sources. Always try to research and gain insight from independent resources before believing anyone. You may find profiles of successful traders to get inspiration. Keeping drawdown at minimal while staying above breakeven are the key factors you can keep as a performance benchmark.
Build your own achievable expectations based on your account size, your ability, and time availability.
If you want to receive an invitation to our live webinars, trading ideas, trading strategy, and high-quality forex articles, sign up for our Newsletter.
The5%ers let you trade the company’s capital, You get to take 50% of the profit, we cover the losses. Get your trading evaluated and become a Forex funded account trader.Get Your Forex Funded Trading Account