Is it possible to get rich via forex trading? How much can you make trading forex? These are a few of the most asked questions beginners generally ask. The answer to these questions is not one word, as it depends on various factors and your mindset.
Forex trading might make you rich if you are a hedge fund with deep pockets or an exceptionally skilled currency trader. However, instead of being an easy route to riches for the average retail trader, forex trading may be a rocky road to enormous losses and potential penury.
Have you ever been persuaded to buy a trading system that promises a 10% profit each month? What about 20% or 30% per month?
If you’re one of those traders who’s still confused about how much money you can make trading forex, forget everything you’ve learned. In this business, there are no guarantees, just possibilities, and probabilities.
You will not earn 30%, 20%, or even 10% profit every month, no matter how good you are. You’ll have a great month now and again, but sustaining those gains is realistic. In my opinion, people who use these kinds of profits as a selling mechanism give this business a poor reputation.
Sometimes you must forget what you believe you know to move on. This is one such situation. Think again if you want to live off of your $500 trading account.
The trading business is a marathon, not a sprint. It’s a gradual, incremental process that demands a lot of discipline to succeed, and massive profits can’t be had without the associated risks.
So, if someone promises you a system that produces 30% monthly profit, you’re throwing a ticking time bomb. This brings me to a highly effective, unconventional method of thinking about earning potential.
You must first focus on the process to become a consistently profitable trader. I cannot emphasise this more. No trader has ever been successful by focusing solely on how much money he or she can earn each month. In truth, many traders have no such goal.
I’m more concerned with how much money I may lose in a particular month than with how much I might gain. Profits will follow if I safeguard my capital and follow the process I’ve put up for myself.
That is crucial in this case. A race car driver does not get into their car and focuses solely on winning the race. Sure, that’s the goal, and it’s something they’re thinking about, but their primary focus is on details like when to brake, how early or late to take each turn, and when to punch the accelerator.
They understand that it is the little things that make a small difference. They’ll almost certainly win if they stick to the good driving process they’ve been practicing for years. Trading is no different. Trying to generate 50% profit every month will not get you anywhere. It will, however, quickly knock you out of business.
Like the race car driver, you should focus on the trading process. Keep your bets small, wait for good setups, and avoid trading the news. These are a few of the steps in this process that you should focus on. Do these things consistently well, and the profits will come to you.
I understand that striving to perfect a process isn’t appealing to everyone. Personally, I like it. But then, I’ve always been a process guy.
If you must set a monetary goal, here are a few suggestions:
Even if you trade forex for a living, you won’t generate a 30% profit every month. If you keep your bets small, as you should, your gains will be small as well. That, though, is a good thing. There’s nothing wrong with aiming for 2% to 5% growth every month. In fact, I believe it is a good place to be in.
This isn’t a goal you want to hit park runs on. If you set a profit target aiming 5% each month and instead earn 40%, you may have over-traded or over-leveraged your account, or both. You don’t want to fuel any of these habits.
The problem with weekly and daily goals is that they don’t give you enough time. If you trade the daily time frame, you may only receive five to ten quality setups every month. You can’t possibly measure a return in one day or even one week if you only do one or two setups every week.
You might also set quarterly and yearly targets. Just keep in mind that the process of achieving those profits is much more important than the money itself.
We’ve got your back! Select brokers by category and find out if they meet your expectations.
I am Ready to choose a broker! Click here.
Choosing a broker is extremely important in every aspect of trading. Trading with the wrong or even an “overnight” broker that is trying to scam you is a harsh reality. Choose a broker that aligns with your needs and that you can trust with your hard-earned money!
In the long run, the amount you may earn from forex is nearly limitless. Entering and exiting the market with millions on the line isn’t even a blip on the radar, with approximately $6.6 trillion transacted daily. That, I believe, is the source of the problem. Everyone is vying for a piece of the $6.6 trillion pie.
But here’s the point. Can you lose more than you invest?
The market rewards those who are disciplined. Even brokers reward traders with “cashbacks or rebates” when the trader opens and closes a trade. Those who have the patience to wait for quality setups and never take excessive risks are rewarded for their prudence. Start treating your $100 account like it’s $100,000. If you have to, write it as $1 million to avoid the temptation to increase your account every month.
After all, 2% to 5% of $100,000 is $2,000 to $5,000 each month in profit. And it’s $20,000 to $50,000 per month with a $1 million account. Those are, of course, merely hypotheticals. No matter how much experience you acquire, you will always have good and bad months.
These figures may seem unthinkable to some. However, many of the multi-millionaire traders we hear about began with far less. Bill Lipschutz, one of the best currency traders of all time, started with a $10,000 investment.
Randy McKay could barely scrape up $2,000 to begin trading, whereas Ed Seykota started with $5,000. Despite starting with relatively small amounts of capital, all three grew their accounts into millions of dollars.Cashback forex - Rebates in your pocket? — 2023
You must think differently if you want to separate yourself from the 90% (probably closer to 95%, in my opinion) of traders that consistently lose money. Most forex traders overtrade and overleverage their accounts in an attempt to make 30% or more profit every month.
So, in order to be among the top 5% to 10% of traders, you must do the opposite. You must prioritise how much money you can lose above how much money you can make. Remember that a trading edge is much more than a strategy. Anyone may learn to trade price action or swing trade and utilise the various strategies of each. That’s not very special.
An edge is a full process from start to finish. It’s something that separates you apart from the crowd. So start thinking ahead of time. You can build your account from where it is now to a fortune over time, but it will take years, not weeks or even months. Are you asking yourself if forex trading is profitable? Read this article.
That is exactly what Bill Lipschutz, Ed Seykota, and Randy McKay did to achieve greatness.
Trading successfully in any market takes endeavour. To become consistently profitable it takes years, not months or weeks. With such knowledge, it is much simpler to take things slowly. Instead of attempting to trade every day, keep bets small and focus on quality setups.
Read our article on forex trading for beginners to further educate and learn. We cover the basics and more.
If someone claims their trading strategy or system earns 30% or 40% per month, run and don’t look back. While such profits are possible, they are not sustainable and will likely lead to a blown account. Years ago, I learned that focusing on trading is much better. This includes, among other things, risk management, having the patience to wait for quality setups, and drawing accurate levels.
Profits will follow as long as you grasp the trading process. In other words, make it a byproduct rather than making money from forex your primary goal. If you must set a monetary target, make it a conservative one. Don’t make the mistake of shooting for 30% or 40% profit every month. A quarterly goal of 5% to 15% is reasonable but still highly appealing, especially for individuals with larger accounts.
Most day traders may achieve a reasonable amount of success trading forex for a couple of hours each day. Of course, the more time you dedicate to it, the more potential profits you may make.