Is Forex Trading Profitable？ How Much Money Can I Make Forex Day Trading?
So far, there has been a lot happening in the world when it comes to business. Virtual investments are soaring up like fireworks and everyone is getting into the crypto and forex market every day. Chances are you're planning on also getting into this but you're wondering if the forex trading business is profitable or meant for you. Hell, you may be asking yourself the question; is forex trading profitable? In this article, we're going to discuss all you need to know to get right into the business and how profitable it can be. As a newbie, it can be pretty confusing so we'll get right into it this instant.
Is Forex Trading Really Profitable?
Foreign exchange trading, popularly known as forex, is one of the most intense, lucrative, interesting, and probably crazy businesses out there. This is major because there's no end in sight as to how much profit you can make. The same applies to loss too. The forex market has been capped at a daily volume of $6.5 trillion. This would keep going because several people keep joining the market day by day. Starting in the forex market can be hard. It comes with a lot of uncertainty and risk. How far you're willing to go depends on just how much you're willing to risk. There isn't exactly an estimated value of how much a person new to forex can profit. This is why we won't be able to provide an approximate value of exactly how much a newbie can make in this business. What's relieving is that there isn't any hidden risk to suffer. By hidden risk, we mean you would be aware of exactly how much you would profit or lose right from the start. It's a steep learning curve that requires a lot of patience and the ability to make wise decisions. Makes you ask yourself again, is forex trading profitable at all?
Like most virtual businesses, the foreign exchange market has been around for a long time. It began to gain recognition worldwide around 2019. Before then it was this thing people thought was restricted to only banks. From the time it began to gain recognition, however, till now, a lot of things have been updated or just completely changed about the business so you must be up to date with these concepts. As said before, this article is majorly going to ask the question you're wondering as a newbie: Is Forex trading profitable?
If you plan on starting as a third trader, on the other hand, you're more likely to not lose money. Trust us, that's where you want to be.
How Much Do Forex Traders Make?
As regards the amount forex traders make, we've said earlier that there's no end in sight. It's what majorly differs the forex business from a paying job. There is no way to determine the salary when it comes to forex. If you're determined, there are no restrictions of any kind on the profit you can make. You can also look at it this way, you have no monthly wage and your returns are dependent on a lot of variables. At this point, we should try to embellish whatever discouragement we might have placed in you in the first place when we explained that almost every forex trader loses money. There have been exceptions to this notion. There has been news about some forex traders who started with as low as $100 and in a matter of weeks capped their profit at $100,000. So yes, there are always cases like this. To answer your question, is forex trading profitable? Chen Linkuy would say yes.
Most of the time in the forex business, your profits depend majorly on your deposits. Let's say, for example, two people invested in the same trade, and it was estimated that they would both make 0.5-2% profit per day. If the first person invested hundreds, his profits would generally be lesser than the other who probably invested thousands or millions.
Other factors can also be included when calculating profits. Factors such as the rise or fall of your leverage, the daily number of lots, and so on. Once there is a rise in leverage, there would also be a rise in risk as well. The rise and fall of your profit depend on the rise and fall of your leverage. This is why high-risk strategies often make the most profits. All in all, your profits depend on both your deposits and your leverage. They both work hand in hand so, sometimes, depositing a huge amount alone may not work out. Makes you wonder, is forex trading profitable when you have a huge profit only?
5 Essential Trading Strategies For Achieving Consistent Profits
1. Stick to one strategy
While starting out in the forex business, you have to make sure you do some research on all trading strategies out there and stick to one. Make sure you have a strategy or strategies you can use on a consistent basis. Some traders do this by determining averages or some more technical definitions of all strategies while others do this by listening to news and see how forex is doing on social media.
A survey on the internet breaks down the several types of trading strategies used by the most successful forex traders.
31% - Swing trading
28% - follow position strategy
27% - intraday trading
14% - follow position strategy.
2. Profit Targets
You have to make sure that you set achievable profit targets. This can be determined by looking at the daily profits of the currencies you're investing in. For example, if the profit on a currency is said to move 2-3% daily, it's not realistic to set a 5% target.
3. High Leverages
High Leverages need to be avoided at every cost if you're planning on making consistent profits in the forex business. Apart from it being a bad way to earn profits, sometimes, the loss incurred due to overleveraged trading can be pretty hard to recover from.
4. 5% Capital Rule
It's important you know that you can only invest 5% of your capital on each trade. Some forex experts recommend lower (1-2%) but it is generally said that the limit of your investment capital into a trade should be capped at 5%
5. Do Research
Every once in a while, you have to make sure you do some good old fashioned fundamental research into whatever trade you're thinking of investing into next. As a newbie, it's advised that you start with at least right different currencies, learn their profit and loss curve, pay attention to terms such as interest rates, GDPs and so on.
Tips For Forex Trading Beginners
Finally, we'll end with some important things you have to make sure of when starting the business. A lot of people jump in without these tips and most of the time, they often crash before even taking off. Try to apply these tips in whatever trades you're going to be making
1. Manage Risk
Forex is to be seen as a "big picture" kind of thing. The destination should be worth the journey. This means you shouldn't look at your losses in the beginning. Chances are, you're going to make a lot of losses on the way, you're also going to recover from them easily if you learn to manage the risks well.
2. No overtrading
We can't stress this enough. As a beginner, you must make sure that you don't overtrade. It's easy to get lost in the sea of trading information online and get involved in some strategies that can cause you to make lots of mistakes and losses. Try sticking to swing trading and trend line strategies. As time goes on, you'll get the hang of it and would be able to sieve trading information properly
3. Make sure you're ready
Readiness in this instance doesn't only mean financially. You have to make sure you can mentally handle everything that comes with forex trading. You have to make sure you can handle the risk and losses. You also have to make sure you can handle the profits too. Sometimes, they can be pretty overwhelming.
4. Always Learn
Like any field, it's never too late to learn something new. The same also applies to forex. Even veterans find something interesting to learn in the market as the days pass. Don't think you're too big for any kind of information. Learn whenever you can.
There you have it. An answer to that nagging question at the back of your brain. Is forex trading profitable? Yes. It is. It won't be easy, that's sure but that's what makes it even more worthwhile. Make sure you understand these tips before you start and you're more likely to make losses you can recover from than the ones you can't.