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I was asked this question on Quora.  Coincidently, it’s the type of question that gets asked quite frequently, as traders (or investors) who are not confident trading for themselves and look to others to trade their funds.  Naturally, there are variations to this question; such as, “What is a good return on investment?”

Win-Win?

First and foremost, asking someone else to trade YOUR money is not necessarily the best idea, especially when they either receive a set commission and/or split the winnings with you.  They never absorb the loss – that’s entirely on you.

Don’t Know, Don’t Care

Second, they really have no vested interest in who you are, your personal financial situation or anything else, other than the money they make on your “financial back”.

Too Bad, So Sad

Third, (and this happened to me many years ago) I trusted a “professional” to trade my account.  He opened an over leveraged position, failed to manage it and blew up my account…all within one day.  When I asked him about it, he replied, “That’s the way the cookie crumbles!  Sorry, dude…”

And the worst part…there was absolutely nothing I could do.  After all, I trusted this person to look out for my interest.  He made his commission and moved on to the next sucker.

News Break

Now, back to the original question about whether 22% monthly ROI is realistic.  I found this little snippet which puts things in perspective:

“In the US, over long periods of time, S&P 500 returns roughly 8% per year, or 0.6% per month. As others have posted, anything returning 1.0% per month is superb. Warren Buffett, the best investor of the 20th century, averages less than 2.0% per month over his career.

Let’s Get Mathy

Let’s do the math!  We’ve created a spreadsheet illustrating 0.6%, 2.0% and 22.0%, representing the S&P 500 average, Warren Buffett’s efforts, and a magical wizard Forex Broker who promises you champagne wishes and caviar dreams.  We’ll plot the data over a year and compounded monthly on varying amounts from $1000 to $250,000.

Suppose you were fortunate to have $5,000 discretionary income.  If you were to follow the average S&P returns for a year, you’d net about $371.  If you traded as well as Warren Buffett (an elite level trader), then you’d net about $633…and if your “guru” ran your account, you’d net about $47,593.  This doesn’t take into consideration pulling out any profits.

Last Word

If you can find someone who promises 22% monthly ROI, figure out what they do, then copy it!  But first, I would insist on a VERIFIED copy of a live (not demo) account statement, where real money was traded for no less than a year.  I would also have a signed contract with clear conditions about who gets what and what happens if bad things happen.  And lastly, EVERYBODY has losing months, even gurus.  If they don’t, be very suspicious.

Be smart and learn to trade your own money.  Coincidently, we have a course to help you with just that very thing.  Click HERE for more information.  As always…be relentless. 

More to Come

There’s a lot more to come.  If you haven’t signed up on our contacts page or subscribed to the YouTube channel, please consider doing so to receive notifications as we continue to publish helpful, relevant, and informative Forex related material to support your quest to becoming a better trader.

You can do this…be RELENTLESS.

BTW – Any information communicated by Stonehill Forex Limited is solely for educational purposes. The information contained within the courses and on the website neither constitutes investment advice nor a general recommendation on investments.  It is not intended to be and should not be interpreted as investment advice or a general recommendation on investment. Any person who places trades, orders or makes other types of trades and investments etc. is responsible for their own investment decisions and does so at their own risk. It is recommended that any person taking investment decisions consults with an independent financial advisor. Stonehill Forex Limited training courses and blogs are for educational purposes only, not a financial advisory service, and does not give financial advice or make general recommendations on investment.