So you have already done your homework. You have scoured the internet for all the best possible articles that can help you learn forex trading. You read all of them and absorbed the best tips and learned the most useful guidelines for trading. You have already developed a strategy that has consistently given you profitable results. And you have demo traded for the past few months and verified that your strategy does indeed work and that you are psychologically ready to get immersed in the volatile market that is forex.
And you are now ready to open a real, live forex account. Most probably it would just be a mini account. Maybe even a micro account. You just want to test the waters and see how live trading is different from demo trading. But still, you want to be real serious about this even if you are just investing a small amount of money. First of all, it is still money, and it is money that you have earned and saved. And secondly, you are setting yourself up for what could be the ultimate investment venture that could hopefully bring you your financial freedom. So you really want to succeed in this. You really hope to make it in this lucrative world of forex investments.
But what should be your goals? How much Return On Investment (ROI) should you target for your first month of forex trading? For your first year? How many trades should you make each week? And how many pips should you bank per trade?
Those are the common questions that a first-time forex trader faces when deciding on the objectives and targets of his first forex account. And all of them are valid questions. And in the answers usually lie the profitability, and even the life expectancy of that account.
Let’s take the ROI question first. What level of ROI would be acceptable as a target for first-time forex traders. Surely, many first-time trader would be aiming for the sky and the moon with hteir first ROI targets. Probably, some of them would already be thinking of doubling their accounts during the first month of trading. It is possible. And many have actually done that. But that should not be the target of any first-time forex trader, for it is more of a sure way to burn your account to the ground if you aim to double your equity during the first month of trading.
Aim for a more modest target. Anywhere from 1% to 2% ROI during the first month would be pretty much achievable and safely feasible. Remember that you are just starting out on trading. And what you need to master are the discipline and control of handling your account properly. You have to make sure that you stick with the strategies that you have developed. And muster enough discipline to trade according to the trade plans that you have prepared. Follow your plans to the letter. You have thought out those trade plans thoroughly before entering the markets. Following your trade plans even if it leads to a loss can gain you the some valuable lessons in trading.
For your first year of trading, not losing any of your money should be your goal. It may sound funny at first. But when you think about the statistic that 90% of all retail forex investors lose their money within the first three months upon making their first trade, that goal can be pretty practical.
If you can earn up to 5% during your first year, then you may be on your way to financial freedom. Otherwise, you may still have to continue tweaking your strategy. Or maybe, a total overhaul of your trading system may be necessary. It may even be advisable sometimes that you go back to demo trading for a while if your first foray with forex trading gave you some losses in your account.
And the reason why you should aim for small gains, even if you have the capacity to double up your account every few weeks because of leverage, is because it would also soften up the effects of your losses should the market go adverse your trading positions.
One very important reminder for you to be able to achieve this is to never overtrade. Choose your trades wisely. There are plenty of opportunities in forex everyday. If the set-up is not really according to you strategy, do not take it just for the sake of being “in” the market. This is a common disease among forex traders. They like having a position even if the market itself is uncertain on where it wants to go. Remember that staying at the sidelines and not entering a trade is a position in itself. You may not be gaining profits when you do not enter a position. But at least, you are not also losing money when you enter a trade just for the sake of entering the markets.
And lastly, do not aim for the number of pips. Do not give your self a fixed target as to how many number of pips you should have before closing a position in profit. It is always best to take what the market gives you. The market does not move the same way each time it goes a certain direction. Learn how to read the market and see if your targets will be reached. Learn to adjust according to the volatility of the market. And study how you can maximize profits while minimizing losses.
The above goals should be enough for a first-time forex trader to target. If after one year of trading you find yourself capable of growing your account consistently then raise your goals. But never do everything during your first year. Never hurry in growing your account or you might just end up hurrying burning your account to the ground.
Follow the author on his blogs which are related to forex investing. Currency Trading For Dummies and Invest Forex
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