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Forex Is this a flawed theory/concept? Is 5-8%/mth TOO conservative?

Discussion in 'Forex Forum' started by alfis, May 18, 2015.

  1. alfis

    alfis Guest

    I've heard many a times about how the most consistent and realistic figures to aim for is 5-8% a month. Compounding that over a few years will indeed provide some serious increase in your account.

    However, speaking to a full time intraday trader, he opened my mind to something else.

    Why only aim for 5-8% a month?

    He says let's assume your system has a win rate of 60%. And you use a 1:1 RR ratio. And you risk 2% a trade.

    Let's say there's 4 trades done a day. And that's 20 trades done weekly. So that's 12 wins, 8 losses. Total nett profit of 8%. Multiply that by 4 that's around 30+% a month.

    I do know if anyone consistently does 30+% a month he's going to be the richest person on earth in the next 1 year. However, the point isn't whether it's realistic or practical, but rather what's wrong with that calculations above?

    Note that it's an extremely conservative number (win rate and RR). So am I wrong to think that 3-8% range is WAY too conservative?

    (PS: This isn't about a 1 million dollar account. It will be a smallish 5 figure account with frequent withdrawals)

    Source.
     

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