Experienced Forex traders will assure you it is worth it, but only if you are careful with the way you deal. It is a winning and a losing game. The main technique is to keep your losses low and your gains as high as time and the market allows.
Can you get rich by trading Forex?
The answer is complicated. Some can, and others battle. Those who battle accrue more losses than gains.
Experience is a great teacher. When you burn your fingers, you need to use it as a learning curve. Do not give up, unless to begin with you weren’t a serious trader.
The experienced traders stand a greater chance of making it in Forex trading. They have probably suffered losses and drawn even, but by watching their account, they have sold their pairs when they observe a change in the market. Their trading needs to be as volatile as the market.
- They are educated traders. They have studied the Forex market for a long time.
- They started with a demo account to practice and gained the knowledge before playing with their real money. They would have made most of their mistakes on their demo account. So don’t be in too much of a hurry if you want to get wealthy.
- They probably started small and increased their deposit as they gained more confidence.
- It’s strange in life; you will always find someone who knows more than you. Don’t be afraid to ask questions. Seek out someone to be your mentor.
- When you go swimming, very few people dive right in. We first put our toes in, maybe scooping some water out. Then you start the gradual immersing. Dealing with Forex is very similar. Test the waters first and then gradually sink in.
There are many options on the stock market. Forex is probably the most convenient way to enter a shares market. You can trade online in the comfort of your home. There is always a market open in the world during the workweek. The world is round, there will always be someone waking up while you are sleeping, and if you play your cards right there will be very little time that you can’t trade. Even weekends can be condensed by dealing with the last market that closes on Friday and logging in when the first market opens on Monday.
You can make use of leverage. The amount of leverage available will depend on your broker. They may look at your trading record to decide if you are a risk worth taking. Trading with leverage gives you more trading power. It gives you bigger payouts, but it can also plunge you into a debt that you cannot handle. When you work with your broker’s money, you need to be careful.
Many people like Forex trading because of the convenience of trading. You set your hours. You can trade no matter where you are as long as you can stay connected to the internet. Holidays become working holidays. Your laptop becomes your constant companion.
To make money in Forex trading, you need to have a strategy in place. You can make your own strategy, download one from the internet, or mix and match between the two. You must know how much money you are prepared to invest. The money you invest must not be earmarked for anything else. Billy-Bob needs new glasses. He has a bit towards them, so he uses that bit in his Forex account to grow it. He hopes that he can then afford the glasses. What a bad idea. You never use money that is needed elsewhere.
When you want to make money with Forex trading, you should have a clear idea of what profit you want to make. You need to watch your losses. You must not leave it too long before selling your currency pairs. Other traders will be watching the prices and could be spooked out of buying your questionable currency pairs. Keep your profits as high as possible and your losses under 5%
To get back to the question: Can you get rich by trading Forex? This is a difficult question to answer. Some people do make a living. Some even make a good living, but it is not a quick, easy solution. The ratio between wins and losses sits at 1:2. For every one person who wins, two will lose. If we look at percentages, we find that approximately 68% of traders lose.
Using leverage is dicey. It can magnify both your wins and your losses. Forex will not lead to wealth if you have too much leverage
The tricks to success are:
- Practice with a demo account
- Work with Forex experts
- Let your expertise develop slowly
The serious trader walks a tightrope between winning and losing. A tightrope walker is in a risky profession. A Forex trader is also in a risky position. The tightrope walker cannot afford to lose concentration. Neither can a Forex trader. If his currency pair gives wide margins, he will succeed. If the margin narrows, he could fail.
Currency pairing relies on the stability of the two countries, both financial and actual. Riots, change of government, or a natural disaster will affect the financial state (usually negatively). It is a broker’s job to be alert for any changes. He must communicate these changes to you, the trader. The man in the street has other things standing in the way, their jobs, and their family commitments. There could be Computer malfunctions and power interruptions. A large business will take this in its stride. They will have technical staff on tap, and a generator will kick in when there is a power cut. The man in the street will not have a technician on tap and will likely not have a generator or a UPS.
Some people look at Forex trading as a get-rich-quick scheme. Those who have been burnt look at it as a get-poor scheme. The crux is to be responsible, educated, and alert. Don’t set your goals on getting rich. Set your goals on making a steady income. Then Forex trading will be worth it.
Why Forex is a bad idea?
For some investors, Forex trading will not work. Other investors have great success with Forex trading. Before entering Forex trading, you need to establish if it is the right fit for you.
Before investing in Forex trading, you need to answer the following:
- Can you afford to lose the money you are using for trading? If you answer “No” then Forex trading is not for you. It is a volatile market, and things could change while you are having a snooze. If you answered yes, then read on.
- Do you understand what Forex trading is all about? No? Then leave it alone. Run away as fast as you can until you educate yourself. As with everything, the more educated you are, the more prepared you are.
- Are you over-emotional? Do your wins send you searching for the champagne? Do your losses send to the pub to drown your sorrows? If this is you, stay away from Forex trading. You cannot trade emotionally. In trading, you need a clear head. Emotions have no place in trading.
- Are you careful in everything you do? How about shooting the rapids? “Oooh no! Far too risky!” Take up parachuting? “Hey, what if it doesn’t open?” If you shy away from risks, Forex trading is not for you. Trading of any sort is not for the wary. You will have wins, and you will have losses. You must have a brave heart!
- If you are overcommitted to work, family, and extracurricular activities Forex trading is not for you. You will not have the time that Forex success requires. Trying to squeeze trading in between all your other commitments will start to stress you out. If you are not normally an emotional person, stress could change all of that. Your trading will then become erratic. Erratic trading leads to losses.
One is taught never to borrow money. If you want an item, you must save for it. Saving is not always possible. For large purchases, like a car or house, you will sometimes need that loan. Forex trading has leverage.
Leverage means playing the market with borrowed money. Now, this may sound appealing. It can broaden the scope of your transactions. On the plus side, it can give you greater profits. On the minus side, your losses will be more than you can afford. Working with money that is not yours can be stressful. It can send you into panic mode.
If you have any problems working within your household budget, you should not consider Forex trading. When you have a win, you can pay the broker back. If you have a string of losses, you will very likely be over your head in debt.
Forex trading is harder than trading on the stock market. Forex trading is a volatile, unpredictable market.
How much do forex traders make a day?
The amount you can make per day is variable because there are many inconsistencies in Forex trading. You are dealing with currency pairs. Each one of the pair is volatile, and its value can change within minutes. With stable pairs, you could make $100 to $500,000. You can see that there is a sizable variance between the two amounts. How much you make per day is dictated by many parameters.
- How much are you investing? The more you invest, the larger your profits (or losses) could be.
- Journaling your profits and losses is important. With this, you can see patterns emerging. It can remind you of bad decisions that you made. Your journal must keep track of dates, times, and amounts of transactions. Keep track of the currencies you used in your trading, and the state of the countries, both financial and actual.
- Set up a strategy. The strategy will help you move into a successful trading experience.
- Keep learning. The more you learn, the better you will be as a trader.
- Trading as a business will be more profitable than trading as a hobby. When you have a business mindset, you are more serious, more careful, and when you take a risk, you would have thought it through. If you have a hobby mindset, you could easily subscribe to an “easy come, easy go” frame of mind.
- Making money on Forex trading is possible, but it is hard work and will take time. It is not a get-rich-quick scheme. Forex trading can be worth the time you spend.
Can you trade forex for a living?
- Because Forex training requires dedication, it is difficult (but not impossible) to trade if you have a 9 to 5 job. Forex trading requires time and dedication. Trading is sometimes not possible as a part-time employment.
- To answer the question: Yes, you can. It is possible but is it probable? The probabilities are not in your favor. So before you run off and resign from your job, you need to make a few decisions.
- You need commitment. No one becomes an Olympic gymnast without commitment. No one becomes a successful Forex trader without commitment.
- Be patient and disciplined. Fortunes are very seldom made overnight.
- You need to roll with the punches. Your trading may result in a loss. Don’t throw up your hands and give up. Tomorrow you may win, and someday you may win big. Learn to take the losses and wins philosophically.
- Be excited about your trades. Think of the joy of the hunt rather than the proceeds. Those who think greedily about the money they could make are seldom successful.
- Sink into a routine that takes advantage of your availability and the hours when the market is more vibrant.
- Set your goal and steer towards it, taking losses and profits in your stride. Learn from your losses.
- Never stop learning. There will always be something for you to learn, no matter how knowledgeable you become.
- Keep a journal. A journal will establish the trends that you are following.
- Keep your emotions in check. When your trading is your bread and butter, it’s easy to become elated or depressed.
- Spread your investment. Some currency pairs will win, others will lose. The more you diversify, the more your losses and wins will average out.
- Find a mentor who will help you out in the beginning.
- Read, study and educate yourself.
- Use the widgets that are available on the internet to help you with your decisions.
It is a challenging, risky way of life but if you have the right temperament you will be successful.
So to tie up, you can make a living but you need knowledge, experience, and enough money to make the time you spend on your trading, profitable.
In trading, there are winners and losers. Sometimes you will be a winner, and sometimes you will be a loser. You need to minimize the losing trades.
Before you throw up your job:
- Run a demo account
- Educate yourself, read, and visit Forex websites
Decide if you can take wins and losses without getting emotionally involved.
Could I lose more than I have in my account?
Yes it is possible if you use leverage.
When I can I actively trade?
You can trade 24 hours a day 5 days a week. Forex is closed over the weekends but with careful planning you can trade in the last market open on a Friday night and the first market open on a Monday morning.
What is the least amount I can have in my account?
Most brokers will allow you to trade with as little as $100. There are some brokers that allow less but it is not recommended.
Must I keep abreast of the news?
Catastrophic happenings in the country of one of the currency pair will affect how it behaves. So yes, keep up with the news for your selected countries.