Minimum Monthly Return to Turn $1000 to $1 Million in 2 Years
First of all, we need to discover what the absolute minimum monthly return is that we
would need to turn $1000 to $1 Million in 2 years.
After we discover this
minimum return, then we can see if it is both possible and, more importantly, realistic
to achieve this minimum monthly return.
It turns out that the minimum return needed to turn $1000 to
$1 Million in 2 years is about 35.1%.
Here is a graph illustrating a monthly 35.1% growth over the course
of 2 years, starting with $1000:
Trading Forex: $1000 to $1 Million in 2 Years - 35.1% Monthly Return Long-Term Trading
In order to make it easier to understand what is happening
in this graph, I have broken it down into separate years.
In year 1, $1000
turns into about $27,000 with a monthly return of 35.1%:
Trading Forex: $1000 to $27,000 in 1 Year - 35.1% Monthly Return Long-Term Trading
Here are the numbers:
- $1,000 x 1.351 = $1,351
- $1,351 x 1.351 = $1,825
- $1,825 x 1.351 = $2,466
- $2,466 x 1.351 = $3,331
- $3,331 x 1.351 = $4,501
- $4,501 x 1.351 = $6,080
- $6,080 x 1.351 = $8,215
- $8,215 x 1.351 = $11,098
- $11,098 x 1.351 = $14,993
- $14,993 x 1.351 = $20,256
- $20,256 x 1.351 = $27,366
In year 2, $27,000 turns into $1 Million with a
monthly return of 35.1% – $1000 to $1 Million in 2 Years!
Trading Forex: $27,000 to $1 Million in 1 Year - 35.1% Monthly Return Long-Term Trading
Here are the numbers:
- $27,366 x 1.351 = $36,971
- $36,971 x 1.351 = $49,948
- $49,948 x 1.351 = $67,480
- $67,480 x 1.351 = $91,165
- $91,165 x 1.351 = $123,165
- $123,165 x 1.351 = $166,395
- $166,395 x 1.351 = $224,800
- $224,800 x 1.351 = $303,705
- $303,705 x 1.351 = $410,305
- $410,305 x 1.351 = $554,322
- $554,322 x 1.351 = $748,889
- $748,880 x 1.351 = $1,011,750
Now that we have established what the minimum monthly return is for turning $1000 to $1 Million in 2 years, we need to estimate what monthly return is actually realistic. Is it realistic to achieve a 35.1% return monthly in forex?
Trading Forex: What
is a Realistic Monthly Return?
If you are daytrading, then a realistic monthly return is
negative. Yes, you will lose money daytrading. But if you are willing to trade
long-term, then a realistic monthly return is 40%.
Wait, how much did we need to turn $1000 to $1 Million in 2
Yep, 40% exceeds the minimum monthly return and I am going to
show you how it is possible trading long-term. As examples, let’s start by looking at two different graphs of the
EUR/USD and one graph of the GBP/NZD pair.
Note: These are not "cherry-picked" examples. You can find tons of graphs that are even better examples than these.
The first EUR/USD graph
is from 2014-2015, and the second EUR/USD graph is from 2017. They both have
something in common.
In this first graph of the EUR/USD, if you had shorted
(sold) the pair on July 1, 2014 and held the position for about a year, you
would have achieved an average of 10 pips per day. That’s a guaranteed average of 10 pips per day.
Overall, you would have gained over 2,700 pips.
Let’s look at the next graph from 2017:
This time, if you had gone long (bought) the pair on April
18, 2017 and held it until August you would have made an average of 10 pips per
day. Again, that’s a guaranteed
average of 10 pips per day.
And here’s the GBP/NZD with a guaranteed average of 23 pips per day:
My point is that achieving an average of 10 pips per day by
trading long-term is both possible and realistic. And again, these are not "cherry-picked" graphs: Some long-term trends even average 25 to 50 pips per day.
In contrast, with
daytrading nothing is guaranteed except that you will lose all your money. But
trading long-term you could realistically achieve at least an average of 10
pips per day.
Now, I have heard of traders talking about daytrading to
achieve 10 pips per day, but it doesn’t work out in practice. If you still don’t
believe me then check out the Top 3 Reasons Why You Should NOT Daytrade Forex.
With 10 pips per day (on average), you would be able to
achieve an average of 200 pips per month.
- 10 Pips per Day (x)
- 5 Days per Week (x)
- 4 Weeks per Month (roughly)
10 x 5 x 4 = 200 Pips per Month
Now, obviously if you are going to trade long-term then you
cannot trade with 50:1 leverage without getting a Margin Call. However, you should never trade with 50:1 leverage anyway. There is a reason why virtually all
consistently profitable forex traders use low leverage: Top 3 Profitable Forex
But especially if you are trading long-term, then you have to be
able to handle the market fluctuations long-term. With an average of 200 pips
per month, you can achieve a 40% return per month using only 40% of your margin in
Starting with $1000 our first trade size is 20,000 units:
- $1,000 x 0.4 = $400 (40%)
- $400 x 50 = 20,000 units (50:1)
Trading with 40% of your margin with 50:1 leverage is the
same as trading with 100% of your money with 20:1 leverage. However, since 50:1
leverage only requires $400 for 20,000 units, you have a $600 margin cushion to
handle the long-term fluctuations.
Your estimated profit for the first month is
- 200 Pips per Month multiplied by $2 per pip = $400
- $400 used as margin, gains $400 in profit with 200 pips per
At the end of the month, you will have approximately $400 in
unrealized profit, with a total account balance of $1,400. Forex brokers
normally consider unrealized profit/loss when estimating your available margin,
so if you have $400 used margin with $600 unused margin and an additional $400
in unrealized profit, then you actually will have $1,000 available margin: $600
unused margin + $400 unrealized profit.
This means you can add to your trade, pyramid style, in
order to maintain a 40% return per month. If you have $1,400 at the end of the
month, then you will want to use $160 as additional margin.
Your new trade size
is 8,000 units:
- $1,400 x 0.4 = $560 (40%)
- $560 - $400 = $160 (also 40% of your $400 unrealized profit is $160)
- $160 x 50 = 8,000 units (50:1)
Now you have a trade of 20,000 units that is about 200 pips
in the profit, and you just added a trade of 8,000 units for a total of 28,000
units invested in this trade. As the trade continues in your favor, you can
continue to use 40% of your unrealized profit as margin to add to your trade.
This is how a 40% growth rate is achieved month after month for as long as the
If you can maintain a 40% growth rate, then you will turn
$1000 to $1 Million in less than 2 years. Obviously, you may not be able to be
in one trade for a whole year all the time: You may follow one trend for 4
months earning an average of 20 pips per day, and then follow another trend for
9 months earning 15 pips per day.
The reason why I used 10 pips for this example is to show that turning $1000
to $1 Million is a realistic goal when trading forex long-term.
most consistently profitable forex traders actually use less than 10x
leverage, which means it would take a lot more time to turn $1000 to $1
Million if you wanted to really play it safe. However, this same
scenario with only 10x leverage (20% of your money with 50x leverage),
means you will be making about $10,000 per MONTH in 2 years.
So you have to ask yourself what is more important: Do you want to win in forex? or Do you want to potentially risk losing money in order to try to achieve some arbitrary goal?
To explain what I mean, let me give you this example:
Which would you choose?
- 50% chance for $1 Million in 2 Years (50% chance of failure)
- 90% chance for $10,000 per Month in 2 Years (10% chance of failure)
I am not saying that you only have a 50% chance of turning $1000 to $1
Million in 2 years following this long-term strategy. But what I am
saying is that the more conservative you are in forex, the higher your
chances of long-term success.
Obviously all the information on
this page is theoretical, but I have used parameters that are realistic
which theoretically makes this scenario realistic. I'll let you make up
your own mind. Some forex traders may exceed this scenario trading
long-term, whereas others may not make it to $1 Million in 2 years.However, one thing is for sure: trading long-term is how to win in forex.