My Job As a Forex Trader
May 14, 2008 by Trader Rich
My full-time job and only job is trading forex. I make $100,000 a year doing so and need to make at least this much to keep up with the cost of living in New York City. The first year I started, my expectations were to have returns of 20% a year while risking only about 1% on any given trade. Based on my calculations, I needed $500,000 of starting capital to realize these expectations. I withdrew a half million dollars ($500,000 USD) out of my bank account to use as my initial capital. This was just money I had laying around and could easily afford to lose. I’m doing great.
This is not a true story but I figured I’d write it as a way of answering a comment I recently received. The comment was:
"…. I don’t understand why do you need a job… if u know and understand so much about forex … why do you need a job?"
I’m not berating the commenter. It’s a great question and one that I felt needed to be addressed. Does my make-believe story answer this question? I’m sure it is possible to make a six-figure salary trading forex with less capital but at the expense of using higher leverage consequently taking on more risk. But don’t be lured by the marketers promises of untold riches. The bottom line is if you want to make money trading forex, you need money. How many sites have you seen pop up over the years that are dedicated to turning $1000 into a million dollars in a year trading forex? I’ve seen quite a few. They last 30 days and then the person running the site mysteriously disappears never to be heard from again.
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I subscribe to your feed through Google Reader, and find a lot of what you write to be insightful. However, I have to ask, if you think that 20% per year is a huge return to make in forex, then why even bother? My 401k made 13% last year not counting the matching funds I got from my employer, and I didn’t have to do a thing. Other mutual funds regularly earn mid-teens, and Berkshire has 20%++ per year for decades. Why work so hard and take so much risk in forex if you think 20%/annually is a crazy joke?
To me, forex trading is risk capital. If all my TA, COT reports, and fundamentals can’t earn 10% per month, then why bother? Just put your money in FXCM’s managed account and get 80%/year with them. Trading isn’t fun enough for low returns.
So I guess my question is, what’s your motivation? And why are you satisfied with returns much lower than you get elsewhere for less risk and work?
Thank you for your answer to my comment. As I said before I found your site good and well documented. I am not a very old trader in Forex Market but I have had one experience with it and I made my opinion about it. So to make a short story longer, I believe that for making some good money you need much more than 500000 USD. And that is because Forex is the land of the big guys, with big money (banks, state economies). Forex is a good business for that ones of us (that ones who don’t own a Bank) only if we became market makers. And this is because only as a market maker you can be sure of your profit. Any other way is risky and UNPREDICTIBLE.
Again great site… I have bookmarked it!!!
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Hi, love the website!
Sorry I’m a bit confused. Did you quit your daytime job to do forex fulltime now?
Is it that the returns on forex are lesser than that earned by trading in equities or fixed income?