What Average Monthly Return Is Considered Good for Forex Traders

The question nearly every trader asks themselves: "Is 5% per month good enough for me?" or "My friend says he makes 20% per month, what about me?" The truth is, setting realistic return targets is one of the critical skills traders often overlook, because unrealistic figures lead to excessive risk-taking, whilst figures that are too low may cause you to miss growth opportunities.

This article will help you understand what average monthly return is considered "good" for Forex traders, based on real data from professional investors, and how to assess whether your returns are sustainable or merely temporary luck.

What Are the Return Benchmarks of Professional Investors

Before setting your own targets, let's first look at what world-class investors achieve:

• Leading Hedge Funds: Average returns of approximately 10-15% per year, or roughly 0.8-1.2% per month
• Warren Buffett: Average returns of approximately 20% per year over 50+ years, or roughly 1.5% per month (compounded)
• Renaissance Technologies (Medallion Fund): The most successful fund in history, with average returns of approximately 66% per year before fees, or roughly 4-5% per month
• Professional Forex Traders: Most target 3-10% per month whilst controlling drawdown to no more than 15-20%

What's notable is that world-class investors don't chase high returns the way novice traders often do, but instead focus on consistency and sustainability.

What Monthly Return Is Considered "Good" for Forex Traders

The answer depends on several factors, but here's a framework to help you assess:

2-5% Return Per Month: Conservative Level

Suitable for traders who want stability and low drawdown. This level is considered very good for long-term growth, because if achieved consistently, over 1 year you'll gain approximately 24-60% per year, which compared to professional investors is excellent.

5-10% Return Per Month: Moderate Level

This is the level most professional Forex traders target. It requires a robust trading system, good risk management, and reasonable experience. This level yields approximately 60-120% per year, which is considered very good if achieved consistently.

10-20% Return Per Month: Aggressive Level

This is a high-risk level, usually accompanied by correspondingly high drawdown. Suitable for very experienced traders with proven systems who are prepared to accept risk. Returns at this level are not sustainable long-term and typically decrease when capital size increases.

Over 20% Return Per Month: Very High Risk Level

This level usually results from over-leverage or temporary luck. It's very difficult to maintain this level consistently, and it typically ends with large drawdown or margin call eventually.

Remember: high returns don't mean good if they come with disproportionate risk. What matters more is consistency and the ability to control drawdown

How to Assess Whether Your Returns Are Sustainable

Having good returns for one or two months doesn't tell you much. What matters is the ability to maintain those returns long-term. Here's how to check:

1. Look at Sharpe Ratio or Calmar Ratio

These metrics tell you whether your returns are worthwhile compared to the risk. A Sharpe Ratio greater than 1.0 is considered good, whilst a Calmar Ratio greater than 3.0 is considered excellent. If you make 10% per month but have 30% drawdown, these metrics will tell you your returns aren't worth the risk.

2. Check Maximum Drawdown

A simple rule is that average monthly return should be at least 2-3 times greater than maximum drawdown. For example, if you make 5% per month, you should keep drawdown below 15-20%. If you make 10% per month but have 40% drawdown, it means you're taking excessive risk.

3. Use Monthly Return Distribution Analysis

Look at how your returns are distributed. If some months have large profits whilst others have heavy losses, it means your system isn't stable. Good Monthly Return Distribution should be consistent, without any months being excessively abnormal.

4. Check the Testing Period

Good returns over 3 months don't prove anything. You should have at least 6-12 months of data before you start seeing true patterns, and it should cover various market conditions, both trending and ranging.

Common Mistakes Traders Make Regarding Return Targets

Mistake #1: Comparing with Others Without Considering Risk

Your friend might make 15% per month, but they might be risking 50% of their portfolio on each trade, or it might be temporary luck that won't be sustainable. Comparing single figures without context is self-deception.

Mistake #2: Chasing Unrealistically High Figures

Many people see advertisements claiming "30-50% per month" and think they must achieve that. The truth is, most of those figures aren't sustainable, or come from over-leverage that will end in bankruptcy.

Mistake #3: Not Adjusting Targets According to Capital Size

Making 10% per month from 10,000 baht capital is easier than making 10% per month from 1,000,000 baht, because liquidity and slippage become factors. Professional traders often reduce return targets as capital increases.

Mistake #4: Overlooking True Costs

The returns you see must be reduced by commission and spread. If you trade frequently, these costs can eat significantly into returns.

How to Use Thaifxbook to Check Your Returns

Connecting your MT5 account to Thaifxbook helps you see a clear overview of your true returns:

• Monthly Gain: View detailed returns for each month, not just aggregate figures
• Drawdown Graph: See how much risk you took to achieve those returns
• Risk Metrics: View automatically calculated Sharpe Ratio, Profit Factor, Expectancy
• Compare: Compare your performance with other traders at similar risk levels

These tools help you see the truth about whether your returns are genuinely good or merely temporary luck, and help you adjust your strategy in time.

Summary: Realistic Targets Are the Key to Long-Term Success

"Good" returns for Forex traders aren't a single figure that applies to everyone, but depend on the risk you can accept, your experience, and your trading system. If you must choose one benchmark, 3-8% return per month consistently, with drawdown below 20% is considered excellent and sustainable for most traders.

Don't be seduced by high figures that aren't sustainable. Focus on building a practical trading plan, controlling risk, and making consistent profits, because in the long run, a trader who makes 5% per month consistently will be wealthier than a trader who makes 20% some months then loses heavily the next.

Use tools like Thaifxbook to track your statistics regularly, improve weaknesses, and set targets that are challenging but realistic. That is the path to true success in Forex trading.