The support forum is built with (1) General and FAQ forums for common trading queries received from aspiring and experienced traders, and (2) forums for course video topics. How to Trade Price Action and How to Trade Forex Price Action videos are consolidated into common forums.
Brooks Trading Course social media communities
Hi – question for anyone about setting goals for ROI (Return on Investment) whether monthly or yearly, but the examples below will use a monthly timeframe.
I was reading on a Forex site that a 15% return per month is a good figure to aim for, but the article was light on details around the size of the balance one can hold and still have a realistic 15% return.
So here is the scenario and it assumes you are only trading 1 pair. It could be a currency pair, or crypto pair but either way you are only trading one chart that has the market cap and liquidity to allow you to grow.
Some people will get to that 15% level and then want to grow further. For argument’s sake let's say the person starts with $1k of capital and grew it to $50k (the timeline is not important), while maintaining 15% a month or lower ROI.
Q1) How does one figure out if 15% is the highest they can achieve? If someone wanted to get to 20% for example, they would need more knowledge or a different set of skills. However, you still have to know that such skills are out there to be obtained in the first place. So, the first question is asking how does one figure out how high can that monthly percentage get, so that you can know how much further you have to grow and what skills you need to obtain.
Q2) Slightly different scenario. Let us say that 15% per month is the highest. Again, you grow your balance from $1k to $50k to $75k. There will come a point where it will be too "difficult" to earn 15% on your capital due to slippage on the exchange and the size of your trading account. The second question is, how does one figure out how high your trading balance can get before one "gives up" on making 15% per month. So instead, they might have to scale it back to 12% and then after increasing their account size again, bring it down to 10% per month. Or to phrase it another way, it might be easier to earn 15% on $1k per month, than it is to earn 15% on 1 million per month (I am making assumptions). How does one know that 1 million is high enough to earn 15% and say between 1 million and 10 million you might need to lower your expected monthly ROI to 12% instead?
So I'm trying to find out if there are any books or material I can use to acquire the knowledge to answer the two scenarios, so that I can reference them if/when I need to.
This is all with respect to manual trading, no bots or staking or anything like that. One will most likely be trading futures and using leverage to help grow their account as they learn.
To my understanding, your ROI would be a function of the risk you're willing to take on every trade and your trader's equation. A discussion on ROI has a ton of discretionary factors which you will be able to figure out if you understand where your per trade risk and the trader's equation fits in the whole situation.
If you're trading Forex, I don't think you need to worry about expanding. Most of the markets we trade nowadays have enough liquidity for us to scale up to a pretty large amount without having to worry about how it impacts your ROI. If you wanna know the exact details, I think you should wait till you grow to a large extent and then consult a quant. He/she will be able to help you figure out the challenges and ways to tackle the problems you might face. Since it is all very subjective, any discussion would only be hypothetical and therefore would hardly serve much purpose for you.
Q1) How does one figure out if 15% is the highest they can achieve? If someone wanted to get to 20% for example, they would need more knowledge or a different set of skills. However, you still have to know that such skills are out there to be obtained in the first place. So, the first question is asking how does one figure out how high can that monthly percentage get, so that you can know how much further you have to grow and what skills you need to obtain.
Again, I don't know how much ahead in the course you're currently because the way you're thinking is not exactly right for the purpose. Once you have mastered Price Action well enough, you will be better placed to figure out how high your ROI potential is, that is to say if you decide to trade only Price Action. Same logic applies on everything else, if you trade on something other than PA. It will ultimately boil down to the risk you're taking on each trade and the trader's equation. There isn't much to think about here, at least in the initial stages. By initial stages, I mean perhaps first 2-3 years of trading where you have earned sufficient expertise on the craft.
So I'm trying to find out if there are any books or material I can use to acquire the knowledge to answer the two scenarios, so that I can reference them if/when I need to.
Not the best person to comment on this, will leave to those who have practical idea on it.
I agree with Abir, I think you're looking at it backwards. It's not about how much you can possibly gain, it's about how much you're willing to lose. You can start out with a small account, say $500, and risk 10% per trade. As a beginner you will likely lose your account, but if you do have a good month, you can show off and tell everyone you had 500% returns. On the other hand, if you start with an account size that means something to you, you will be much more careful, risking 0.5% per trade and make much more money, but your % return will sound like nothing special.
You don't aim for 20% return, you don't focus on that. Your focus should be on the risk. You risk x% per trade, and you exit when the price action tells you to. Sometimes that will be 1:2R, sometimes that will be 1:6R. Sometimes you will lose. At the end of the month you check your % return as a statistic and track it to see how well you're performing, but you don't aim for specific numbers until much further down the line, if ever at all.
Okay cool, thanks for both replies and the insight. I will keep the feedback in mind then.
I am for daily returns. I trade e-mini and a good day for me is $500, an average day for me is $200, and a bad day for me is -$300.
I wrote a simple program to calculate outcomes w risk models. I knew my win rate reliably close after years of back test - I tried 1% all the way to 10% and found out that 3% is the right risk for most profitable outcomes w my system. From there I just don’t plan for a monthly ROI, I just try to look for x number of setups and get at least one a day. If I want more money I’ll have to trade sleep and time in order to spot more setups and/or backrest more currency pairs to make more opportunities come up.
ROI is only controllable that way for me. More setups need to be found if I want more returns.
