Brian McAvoy from Inside Out Trading breaks down whether 10% monthly returns are realistic for traders. He covers risk management, profit-to-loss ratios, and what it actually takes to hit that target consistently.
Hi, Brian McAvoy with Inside Out Trading here today. I'm going to show you how you know in trading when you do it right. Making 10% monthly ROI is not unreasonable. Before we get started, make sure that you subscribe to this channel, and if you're on YouTube, make sure you go ahead and click the notification bell. Okay, so let's, let's just, you know, go through an example here and see if the numbers are reasonable. Let's say you have an account size of $10,000, and your risk management says you have a per trade risk of 2% or $200. Again, 2% is reasonable. That means you have a losing trade. Let's say every losing trade averages out to $200. And let's say also your system, the way it works, it winds up netting you a profit to loss ratio of 1.5. Not super aggressive, not super crazy, gives you a winning trade of $300. 1.5 times 200, that's $300. So let's say you got a winning percentage of 50%. Half the time you're right, half the time you're wrong as far as what you think the markets are going to do. So that means for every two trades, you're going to have one winner of $300 and one loser losing you $200 for net profit on the two trades of $100. $300, 200. So that gives you an average return per trade of the 100 divided by two trades. That's $50 for your average return per trade. Again, let's look at the math. We have an account size $10,000, average return per trade of 50 bucks. You place 20 trades per month. That's just one trade per day. Again, not being all crazy, just one trade per day. Well, your monthly profit is going to be those 20 trades times the average of $50, average profit or average return per trade. And so that means your monthly profit is going to be $1,000. So 20 times 50 bucks, that's $1,000. Well, your monthly ROI is going to be the profit divided by your account size or $1,000 divided by $10,000. So that does indeed, yes, give you a 10% monthly ROI. One thing that a lot of people forget, you know, they'll just be looking at the system and you know the per trade numbers, and they forget that your monthly profit, it's your average return per trade times the number of trades you place. I mean, it's both. So you know your average turn times how many trades you're placing. That's your monthly profit. And that's really what you're going for, is the monthly profit. I mean, your monthly ROI is a function of both the individual trades and the number of trades you place during the month. So back to the original question. Is a 10% monthly ROI reasonable in trading? Well, again, we started with an Account size of $10,000, a per trade risk limit of 2%. Again, recommended risk management, profit to loss ratio of 1.5. Not super crazy, not extreme by any means. A winning percentage of 50%. You're right half the time, you're wrong half the time. Very reasonable numbers. Okay, and again, just basic math. Your monthly profit is your average return per trade times number of trades. So again, to our example, the average return per trade of 50 bucks, placing one trade per day, 1,000 bucks on a $10,000 account. Yes. Can reasonably yield a 10% monthly ROI. And these are just the numbers for this example, but they work for any size account. Reasonable risk per trade, reasonable win percentage, reasonable profit to loss ratio. You can make really good money if you have the opportunities and you got a decent system and the system works the way it's supposed to. Yeah, 10% monthly ROI. Very reasonable. And at 10% a month, you're going to more than double your account every year. Yeah, it's pretty cool, huh? Well, yeah. When your trading's working right, are those kind of returns possible? Reasonable? Yeah, they sure are. So here's the key to it all, though. You gotta have a system that actually is repeatable and it's designed for consistency. It's not just a clever strategy. There are lots of strategies. There are hundreds of strategies out there, and they're all sexy sounding, very clever. Look at all this money we're making over here. But being able to do it again and again and again, hundreds of times over, you know, the coming weeks, months, and maybe even years. No, most systems suck. And that's where, you know, most traders have a hard time. You know. Yeah, maybe you've probably done it yourself, you know, where you've gone through a whole bunch of systems and none of them work, or at least not for very long. And, you know, you're back to square one, looking for a good system. Well, yeah, because they're not good systems. They're clever strategies, but they're not good systems. And that's what I teach people is how to, you know, take your system and make it a good system, or take any strategy or system and make a good system out of it, where the repeatability and the consistency is built in. From the start. Start. So. But. And that's the whole key to making it all work. Of course, you know, you may have some psychological stuff you got to deal with. You know, some painful trades, bad experiences, losses you know, you got to deal with. I can help you with that too. But anyway, that's for another conversation. Right now we're talking about, you know, are these kind of numbers reasonable for your trading? Yes. That's what I hope you do. Anyway, I hope you found this helpful. I really do. Hopefully, you know, this has gotten you past something. Maybe your limiting beliefs, some of your, you know, mental blocks. As far as, you know, what is possible with trading 10% ROI. Not crazy. You double your account every year. And again with reasonable numbers. If you'd like to find out more, if you'd like to talk, go discuss your situation, see if I can help you work past your obstacles. Get your trading performing swingbyinsideouttrading.com be more than happy to help you out. In the meantime, I hope you found this video helpful. If I have, you know, give me a thumbs up down below. Subscribe to my channel, Share it with your friends. Anyway, thanks for watching. Cheers.
