These are the questions that I am usually asked:
- How much money can I make trading Forex?
- Can I become a millionaire through Forex trading?
To answer these questions, I have created a Microsoft Excel Spreadsheet to show you how much money you will make with different account balances. You can download the spreadsheet HERE, while you can also watch this video that shows you how to use it. Please don’t forget subscribe to our YouTube Channel not to miss our videos.
On this spreadsheet, I am comparing four different account balances to show you how much money you will have in your account, after three years of trading and with making a fixed amount of profit every month:
If you start with a $500 account and you make 2% profit every month, after three years your account balance will be $1,020. Please note that I have assumed that you don’t withdraw any money and you just grow your account for three years.
If you start with a $500 account and you grow it for three years, your account balance will be $1,020. And if you decide to withdraw money after three years, while you make 2% profit every month, you make $20 a month:
- If you start with a $5,000 account and you make 2% profit per month, your account balance will be $10,199 after three years, and if you start withdrawing your profit after three years, you can have a $204 monthly income;
- If you start with a $50,000 account, after three years of making 2% profit every month, your account balance will be $101,994, and if you withdraw your monthly profit after three years, you can have $2,040 per month;
- If you start with a $500,000 account, after three years of trading and making a 2% profit, your account balance will be $1,019,944, and if you start withdrawing your money after three years, while making 2% profit per month, then you can have a monthly income of $20,399.
On the same spreadsheet, I have also given you the option to enter any account balance that you want to see how much money you will have after making N% profit every month for three years. You can also change the monthly profit percentage. For example, if you make 5% profit every month with a $100,000 initial account balance, your account balance will be $579,182 after three years, and you can have a monthly income of $28,959.
My goal from creating this spreadsheet is to show you the importance of your account balance in Forex trading.
This is very important for those who think that they can start with a small account like $500, and for example they plan to double their money every month. If they want to double their money every month, they have to enter 100% profit on the spreadsheet. If so, after three years of doubling their account when they have started with a $500 account, their account balance will be $34,359,738,368,000 ($34+ trillion) which is impossible 😀
Have you ever seen any Forex traders who starts with a $500 account and ends up with having a $34 trillion account after three years?!! 😀
That’s impossible. You can start with a $500 account, but you can’t double your money every month for three years. Even if you are such a talented Forex trader who is able to double their account, consecutively and consistently, every month, for three years, the Forex market doesn’t allow you to do that. Even if the Forex market allows you, your broker won’t. If your broker is market marker, then they will make you run away even before your account balance reaches $10,000. If they are true ECN/STP brokers, then their liquidity providers, who are mainly market maker banks, won’t handle your orders and positions. You could trade through banks, but banks also cannot handle this huge amount of money.
You cannot double your account every month for three years. As I said, even if you are such a talented Forex trader, markets, brokers and the market’s capacity don’t allow you to do it.
So let’s be realistic. If you start with a $500 account and you make 3% profit every month, which is a reasonable monthly profit, your account balance will be $1,449 after three years. Such an account balance is not enough to make a living through Forex trading.
If you want to make a living through Forex trading, then you need to start with an account which is at least between $50,000 to $100,000. For example, if you start with a $100,000 account, after three years of making 3% profit every month, your account balance is going to be $289,828 and your monthly income will be $8,695 which is a relatively reasonable monthly income, if you decide to withdraw your monthly profit after three years of trading and making 3% profit to grow your $100,000 account. You will be holding a $289,828 account which is also a little risky to have such an account with a broker, although I have seen some traders who have $7-10 million account with retail Forex brokers. This is part of the risks that you must handle when you want to make a living through trading. If your account grows big, you can trade through banks that are much safer than online brokers.
So the conclusion is in having a relatively big account if you want to make a living through Forex trading, and this is a big problem for many Forex traders because they cannot afford to open a reasonably big account. Many novice traders don’t have such an amount of money to open a trading account, if we assume that they have already become a consistently profitable trader who is able to make 3% profit every month, which is also a different story and needs lots of time and practice to reach such a level of profitable trading.
Most retail traders cannot afford to open an account with such a big balance. And if you start with a small account like $500 or $5,000, after three years of trading and making profit consistently, you will end up with such an account balance and a monthly income of $435 which is not reasonable and enough. You cannot make a living with such a monthly income.
What Is the Solution?
The first thing that you have to note is that trading, be it Forex or stock trading, is not a business or job. It is an investment opportunity. It means you should already have a source of income that makes money for you consistently, and then you use a portion of the money you make to trade Forex or stocks to make more money. So you use currency or stock market to force your money to make more money for you. You should already have a source of income like a business that makes money for you consistently. You cannot rely on Forex or stock trading as your main source of income because sometimes it is not possible to make a fixed amount of profit every month.
So the solution is in having a strong and reliable source of income that makes money for you consistently every month, and then you use a portion of the money that you make to trade Forex to increase your wealth. If so, you won’t be worried if you can’t make any profit through trading for a while. You won’t care because your business or your source of income is making money for you every month and you are not relying on the money that you are making through Forex trading. Therefore, you will wait for the strongest trade setups and you will trade without any stress and without forcing yourself to make money through trading which is a wrong behavior that causes you to lose.
So the answer of this question that whether you can become a millionaire through Forex trading, is yes, if you start with a reasonably big account. To do that, you need a lot of money.
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