Can You Get Rich by Trading Forex? - Honest Breakdown
Whenever someone is presented with the question “Can you get rich by trading forex?” they probably think of a negative response.
The truth is, over 90% of all retail traders end up losing their money in some way or another largely due to their lack of patience and carelessness.
Carelessness may refer to poor planning and implementation, bad judgment, or poor money management skills.
People who are bad with their money, are in debt, have a bad credit score, are unemployed or have a low paying job, etc should try to sort their problems out before venturing into any form of trading.
Psychology says that people who hate to lose or are perfectionists by nature will also have a hard time trading successfully as their tendencies will frustrate them eventually when things start going south.
That being said, perfectionists don't necessarily have to avoid trading entirely.
They will be alright if they manage to keep their expectations in check and accept the little losses that they face along the way.
Every forex trader has lost some and won some. Its all part of the game that you cannot avoid.
Forex Will Not Make You Rich Overnight
One of the most crucial truths about currency trading is that it is not a get rich scheme that will fill your bank account overnight.
Being able to make good money on the foreign exchange market is a skill that has to be acquired first and that takes significant time and dedication.
Beginners often sign up for courses or join forums to learn the basics of forex. The ones who are lucky enough manage to get a mentor who guides them under this tutelage.
But learning the basics from a prominent source does not guarantee you anything. The only way to test your skills is to dive into the world of forex head first.
You can, of course, have a few safety nets in place when you are starting fresh such as stop limits or use simple demo accounts to gain more confidence in your abilities.
You Need To Have Plan And The Power To Back It Up
Beginners often make the mistake of investing a mere few hundred dollars into their trading capital reserves and call it a day.
You cannot expect a few hundred dollars to blossom into a million-dollar investment.
Everyone who has had a taste of the foreign exchange market is well aware of its highly unpredictable nature.
The fx market which is also called the foreign exchange is said to be the most liquidated market in the entire world where trades worth trillions take place each day.
The market itself is highly speculative which is why you can’t go in without a plan if you want to be successful at it.
Practice What You Have Learned Every Day
One can’t stress this enough but the key to being a successful forex trader and make a substantial amount off your trades requires you to be confident in your abilities.
The only way to gain confidence is to have some success with the trades you participate in.
And the only way your trades won’t blow up in your face is when you have had enough practice under your hat.
Now for those who are worried that they will blow up their capital if they started right away can opt for the demo account that is provided by various online brokers.
These demo accounts allow trading in a virtual account with a dummy currency. You can use this fake or dummy currency to trade in real situations and gauge your skills.
Over time you are sure to gain enough confidence in your abilities after learning from your mistakes.
Think of the demo account as a set of training wheels that allows you to trade without any consequences.
After that, you can simply switch over to the real account where the earnings, as well as the consequences, are completely genuine.
Don’t Stay On The Same Level
As a trader, you must have the mentality of leveling up. Don’t settle for a set of skills. Always look for the next way up.
The best way to be on your feet is to keep track of other traders that are on your level as well as other traders who are numerous steps ahead of you in terms of skills and earnings.
The easiest way to do this is to sign up for a free online platform for traders called the Forex Factory.
Forex Factory is almost like a social media platform where the only topic in every corner is trading alone.
Numerous forums and threads are available here for traders of all levels and experiences.
Many traders maintain a public journal and constantly allow other traders to pick their brains for new information and tactics.
The point of this exercise is to allow yourself to build relationships with people who are like-minded and share the same goals as you.
Competing with traders who are on your level and looking up to your seniors will constantly inspire you to improve your skills as a trader.
What’s even better is that you can also ask for help from others if you ever feel stuck or have a doubt about anything related to forex.
Keep An Eye On Your Leverage
Leverage is quite affordable in forex trading as many brokers allow you to borrow a significant amount of money from them so that you can start investing.
However, leverage can be a double-edged sword that may end up hurting your profit margin which is why traders should only go for leverage when they are sure they have the advantage.
Therefore you must keep a close eye on your leverage before it drags your profit margin down.
Conclusion: Yes You Can Get Rich by Trading Forex
The bottom line is plain and simple, it is entirely possible for a regular person working a 9 to 5 job trade forex and make a substantial amount from it.
However, an unemployed person should stay clear from fx trading as they are in no shape to bear the cost that comes with it.
Dive into trading only if you can afford to. Your initial capital should be at least 5 digits in a separate account.
Do your research thoroughly, enroll for a forex class that covers each topic such as leverage, positions, strategies, stops, etc.
By the end of your course, you should have deep knowledge about all the terminologies that are used in forex trading.
Afterward, you will have to do more research in finding the right broker for you. Meanwhile, start preparing yourself psychologically for the journey that awaits you.
Trading forex is no joke and you will have to be patient and disciplined to be able to pull through.
Furthermore, maintain a trading journal and update it regularly with your ideas and all the things that you have learned so far.
Use the demo account to practice your ideas and see if they work under real circumstances or not.
You must try to be confident in your abilities and practice scenarios over and over in your head.
Lastly, always keep in mind that there are no shortcuts when it comes to trading forex, and ultimately, its the journey which makes the trader what he is.