Gentlemen,

Question is not what returns are possible, question is what returns are sustainable.

We`ve been trading Forex since early 1997. We do this for a living. I thought we may be able to offer some perspective on the matter.

Forex trading (or Option trading, Futures trading, Stock trading, etc.) is making bets against a broad market. Trader`s skills determine how good odds are on any particular bet. The size of bet determines the return on investment also the risk of ruin.

Important concepts to grasp are:

1) no matter how good trader is, winnings will be followed by looses and vice versus;
2) oversized bets will lead to oversized drawdowns (up to complete loss of the account)

Short term streaks happen. Market may allow a trader to hit several winners in the raw making him/her look as a God. But you may be sure of one thing – it will come back and hit with the raw of losers - sooner rather than later. This is why there is so many “good traders” with short track record while there are very few with a longer one.

Lack of money management leads to high risk of ruin. Further, it is possible to estimate such risk of ruin mathematically. Basically what it means is if you invest in some trading program with high risk of ruin, you’ll loose all your money eventually (and some times as quick as in few weeks).

Now back to the question about “good traders” performance. Well, it all depends: on investment objectives, risk tolerance, luck. Myself, for a conservative investor, anywhere from 5 to 10 percent per month (after my fees),
I consider to be a pretty good month. Basically it allows targeting close to 100% p.a. compounded and if you can double your money every year you are God.

You may want to check the following link, to get an idea about how currency traders are doing as a group:

http://cisdm.som.umass.edu/indices/trading/ctacurrency.asp

Sincerely,