Question,
I am amazed about how much potential profit you can make on forex, am I right in thinking if you can make 20 pips per day, you are on your way to make a small fortune?
Start,
pips(20)*stake(1)=profit1(20)
profit1*pips = (400)
Stop when profit1=1million
This compounded way of reinvesting your profit of pips should make alot of money very quickly??...
is this viable?
If you average 20 pips a day, just set it so that 20 pips is 1% of your account, do it for 5 years with a starting account of 10k, then we have the following:
10000*1.01^(230*5) = £932,350,000
As you can see, its easy to come up with theoretical compounded account growth estimates, a lot harder to achieve them. Ask yourself whether the people who do average 20 pips a day (there are probably quite a few of them on T2W) are this rich.
there are practicalities involved.
firstly, the amounts are exponential, not linear.
assuming 200 trading days per year (allowing for holidays, potential sick days, system downs, bad ju-ju, etc)
after 50 days (3 months) your account is worth £16K.
after 100 days (6 months) its worth 27K.
150 days (9 months) £44K.
after one year, "only" £72K. (I say only, to illustrate that the 900million is not earned linearly over the five years, but in the latter parts of the project)
now, assuming you have put aside a years worth of money for the first year, you will be drawing from the account to live on; say, 40-50K.
at the start of year 2, your account is starting from 20-30K, not 70K.
the above assumes tax-free growth. even if the first year is free, at some point you need to go DMA. any profits will be taxed.
I thought 20 pips a day was viable. It is. But its a real grind. I havent done the equivalent of turing £xK into 7xK.
You also have to go gunning for 30-40 pips in reality, to factor in losing days.
20 pips should be "nett".
I am also curious why pip Mr Gecko doesnt like counting in pips. I always thought thinking in terms of pips made to pips risked, and factoring in win/loss ratio was a good way of "normalising" data so comparisons are easier to make between different systems.
have a good trading week.
