If you’re new to trading, you might well wonder if it’s really possible to make a living from currency trading, given that the majority of small traders do not.
The short answer? YES!
It’s definitely possible to make a consistent income from Forex trading.
We’re at the start of Part III of the guide where we’ll show you how you might start making money from Forex trading. So, what are your chances of becoming a successful Forex trader, and how much can you make? Let’s jump right in.
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Becoming a professional trader is possible
The issue with many new traders is that they underestimate the level of commitment required to really succeed. They’re not ready to do what it takes to become a real trader.
They don’t spend enough time and energy to develop their patience and discipline, to build a winning attitude with a realistic mindset, or acquire the trading skills and knowledge that will allow them to be consistently profitable.
They often give up at the slightest mistake or challenge, or make undisciplined, wild trades which frequently leads them to lose more than they should do.
To be able to build a career as a full-time Forex trader, there are many things you’ll have to do right over the long-term.
Whether you’re a part-time or full-time independent trader, your main goal should primarily be to be a good trader. The money will follow.
Create your trading routine
For that, you need to act like a professional trader and create a trading environment and routine that a professional trader would follow.
Don’t worry, creating a trading routine is easy – you just need to remain motivated and committed over time. The most important thing is to develop your own trading routine, one which fits your trading style and daily life.
To achieve that goal and boost your performance while continually progressing, you’ll need to:
- Honestly assess your understanding of trading, know yourself very well, and recognise the things about yourself that affect your discipline, patience, focus, and follow-through.
- Have a sound knowledge of how trading and the currency markets work.
- Keep in mind your end goal.
- Create and follow a profitable trading system with solid risk management (risk-reward ratio, win rate, stop-loss and take-profit orders).
- Know how to adapt yourself and your trading strategy to changing market conditions over-time.
- Track your progress with a trading journal, and monitor your track-record.
- Develop winning habits and adopt a positive mindset to be able to get over the obstacles of Forex trading, as well as overcome your own unhelpful tendencies (over-trading, trading out of boredom, trading impulsively, and cognitive biases such as anchoring, recency, confirmation, addiction, loss-aversion, etc).
- Keep learning to optimise and improve your personal skills and your trading practices.
How much trading capital should you start with as a Forex trader?
Nowadays, you can start trading with as low as £100, but don’t expect to make a living with such a small amount of initial capital.
Part-time vs. full-time traders
It’s easier to start small in order to test your trading strategy, to learn how to follow your trading plan no matter what, and to build confidence in order to become a good trader, while earning extra money to complement your salary.
You’ll also have less pressure and emotional attachment than if you had to trade for a living straight away, because you still have the benefit of income from your job. You can then focus on becoming a good trader that makes profits each month.
If you can make winning trades and constant profits with a small/medium trading account, then you can do the same with a bigger account.
Determine the right approach for you
If you’re brand new to trading, it’s risky to start using real money before you understand how trading works. Invest in yourself by improving your trading knowledge, so you avoid making costly mistakes that take you out of the game before you’ve even got started.
- Learn more, take our premium course: Trading for Beginners
Once you learn more about these trading practices, you can determine the way you approach the market.
- How available are you to trade?
- Are you going to use technical or fundamental analysis?
- Are you going to develop automated trading strategies, or rather use discretionary trading techniques?
Thinking about trading approaches, you’ll come to realise that what your Forex broker provides for analysis isn’t enough. Your trading system may require purchasing additional software, trading tools, or powerful news feeds, for instance.
Once you know how much trading education you need, and if you’re going to require additional tools to properly trade, remember that you will need to trade large enough trading positions to be able to make money to sustain a healthy income.
You will also need to make sure you’re not placing excessive risk on one single position.
How much money do Forex traders make?
We’ve all heard of stories of Forex traders that made millions in the markets in the short term.
Despite these stories, trading isn’t a “get rich quick scheme” – it’s a business, one that requires work and dedication to grow over time. Knowing exactly how much money Forex traders earn every month or every year is impossible. No one really knows.
But there are some elements you can take into consideration to get a good estimation of how much money you can make from FX trading. Key elements to consider:
- What is the size of your trading account?
- How many trades will you do per year?
- What is your expected return for every dollar you risk (trading expectancy)?
- How much you will risk per trade?
- Will you withdraw your profits, or not?
When you know all these you can estimate how much money you might make – this analysis is easier to do once you have a track record to look back over.
In any case, the odds of you building a successful trading career are good if you start acting like a professional trader, with realistic goals set in place and a sound trading strategy with a positive expectancy.
Find inspiration and motivation in other famous Forex traders’ paths to create your own success
Like any other kind of job, Forex trading requires that you learn the right trading skills and techniques.
Learning from (or better yet, with) mentors who are successful and experienced Forex traders is probably the easiest and most effective way to receive the required trading knowledge and practice to forge your trading career.
Reading the stories of profitable Forex traders’ road to success can also give you ideas on what to do, as well as which mistakes to avoid, without sacrificing any of your trading capital.
So, who are the best Forex traders in the World you can read about?
George Soros, Bill Lipschutz, Paul Tudor Jones and Stanley Druckenmiller are frequently listed amongst the best Forex traders. They all have a story to tell, not only of their successes but also their mistakes. All of them have a lot to teach you on how to profit and make money with Forex.
We would recommend you can get yourself a copy of Market Wizards by Jack D. Schwager it is a fantastic insight into some of the world’s biggest traders.
So, consider this…
Entering trades is like a battle – if you want to win it, you need to be ready and prepare for it. Markets are unpredictable, and you can’t predict every possible scenario, but what you can control is yourself.
Learn the skills needed to trade the markets on our Trading for Beginners course.