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It Is Like The Tortois And The Hare

Most of us are attracted to Forex trading because of its speculative nature. An opportunity to make money more “easily” than our current situation affords.

The question I pose in this article is what is deemed to be a realistic return on risk. Consider that you have a spare or free $1000 that you can afford to risk what annual return would be realistic?

If we placed our $1000 in a bank account that returned say 5% per annum our account or equity ball would rise to $1050 in 12 months. It would take a little over 15 years compounding annually to double our equity to $2000. Of course, this would be slow and steady but with very minimal risk. If you deposited $80 into your bank account monthly, then at the end of those 15 years your balance would be a little over $23,000 with a profit of almost $8000. It would take approximately 25 years for your deposits to equal your interest return. Your contributions would be $25,000 and your interest return a fraction over $25,000. As you can see it is slow and steady, but it is for the most part very secure.

Now let us take $1000 and speculate on the Forex using the power of compounding. Let us be ultraconservative and assume a monthly return of 1% without any monthly contributions in 15 years our equity would have grown to $6000 and 25 years almost $20,000. Your contribution would be the initial $1000 and the profit $19,000. Of course, you would have to allow for your time to analyse, select and place trades.

Next let us take the same $1000, but also deposit $80 a month and still assuming a 1% risk and return per month. Then in 15 years the equity would be $46,000 and 25 years $170,000 approximately.

Any sound Forex strategy should at least return 1% per month. It shows you that slow and steady with time can produce a very tidy retirement lump sum for part-time traders.

In the chart below you can also see the result of a 2% per month return and our goal with Trading Made Simple of 6% (not guaranteed) per month.

A slow and steady approach is realistic but requires much patience. It is slow to begin with, but when compounding takes effect over time the results become exponential.

It Is Like The Tortoise And The Hare.

 Suggested reading:

The Richest Man in Babylon by George S. Classon

The Compound Effect by Darren Hardy


If this is of interest to you for the less than a cup of coffee a day contact us using the contact form for further details or go directly to the access page.

DISCLAIMER: Trading futures, options on futures and off-exchange Foreign Exchange market (FX, Forex) is very speculative in nature, involves considerable risk and is not suitable for all investors. Before participating in trading, you should carefully consider your investment objectives, level of experience and risk appetite. Investors should only use risk capital when trading because there is always the risk of substantial loss. Most importantly, do not invest money you cannot afford to lose. Any mention of past performance is not indicative of future results. Account access, trade executions and system response may be adversely affected by market conditions, quote delays, system performance and other factors. Past results as represented in testimonials are not necessarily indicative of future results or success. Testimonials may not be representative of all reasonably comparable students. Trading involves significant risk of loss and may not be suitable for all investors. RISK WARNING: Trading futures and foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. The high degree of leverage can work against you as well as for you. Before deciding to trade foreign exchange you should carefully consider your monetary objectives, level of experience, and risk appetite. The possibility exists that you could sustain a loss of some or all of your deposited funds and therefore you should not speculate with capital that you cannot afford to lose. You should be aware of all the risks associated with foreign exchange trading, and seek advice from an independent advisor if you have any doubts. Past returns are not indicative of future results. HYPOTHETICAL PERFORMANCE RESULTS HAVE MANY INHERENT LIMITATIONS, SOME OF WHICH ARE DESCRIBED BELOW. NO REPRESENTATION IS BEING MADE THAT ANY ACCOUNT WILL OR IS LIKELY TO ACHIEVE PROFITS OR LOSSES SIMILAR TO THOSE SHOWN. IN FACT, THERE ARE FREQUENTLY SHARP DIFFERENCES BETWEEN HYPOTHETICAL PERFORMANCE RESULTS AND THE ACTUAL RESULTS SUBSEQUENTLY ACHIEVED BY ANY PARTICULAR TRADING PROGRAM. ONE OF THE LIMITATIONS OF HYPOTHETICAL PERFORMANCE RESULTS IS THAT THEY ARE GENERALLY PREPARED WITH THE BENEFIT OF HINDSIGHT. IN ADDITION, HYPOTHETICAL TRADING DOES NOT INVOLVE FINANCIAL RISK, AND NO HYPOTHETICAL TRADING RECORD CAN COMPLETELY ACCOUNT FOR THE IMPACT OF FINANCIAL RISK IN ACTUAL TRADING. FOR EXAMPLE, THE ABILITY TO WITHSTAND LOSSES OR TO ADHERE TO A PARTICULAR TRADING PROGRAM IN SPITE OF TRADING LOSSES ARE MATERIAL POINTS WHICH CAN ALSO ADVERSELY AFFECT ACTUAL TRADING RESULTS. THERE ARE NUMEROUS OTHER FACTORS RELATED TO THE MARKETS IN GENERAL OR TO THE IMPLEMENTATION OF ANY SPECIFIC TRADING PROGRAM WHICH CANNOT BE FULLY ACCOUNTED FOR IN THE PREPARATION OF HYPOTHETICAL PERFORMANCE RESULTS AND ALL OF WHICH CAN ADVERSELY AFFECT ACTUAL TRADING RESULTS. Privacy Policy