Although trading forex is not a new concept, it’s becoming more popular due to social media. If you’re familiar with any social media platform, you’ll see people claiming they can make you millions from forex trading.
But is this really the case?
The problem with most online success stories is that they make forex trading seem simple. Once you read those stories, most people believe they can jump into the world of forex and make lots of money quickly.
It may seem like a simple concept, all you have to buy high and sell low, right!
In reality, Forex trading is a lot more complicated than this. If you’re trying to trade forex for a living, the journey will be very long and require a lot of hard work.
That being said, it’s possible to make a living from forex. Many people have already done this because there are still lots of successful professional traders. However, these traders will have lots of experience as they’ve been in the forex market for years.
If you’re thinking about quitting your job to trade forex, you must be prepared. To help you out on your journey, we’ve put together a toolkit of what you need to start and help you set realistic goals from forex trading.
What are your expectations from forex trading?
There are many misconceptions when it comes to Forex trading, which is a problem with most beginner traders. If you’re starting your forex journey based on ludicrous claims from ‘forex gurus’ or success stories from family members- you’ll often be left disappointed.
For every success story, there are hundreds of other failures that you will never hear.
Unfortunately, people believe forex trading is a ‘get rich quick scheme.’ This is far from the case. The most successful traders will have made their money through slow and consistent progress.
You shouldn’t enter the forex trading industry thinking you can make a 50% return in a month. Social media forex traders may claim to make you this figure, but this is very unlikely. It’s also almost impossible that you can make these kinds of returns consistently.
Truthfully, most online forex gurus will exaggerate their returns to persuade you to buy their tutorials and packages. They are not making their money from forex. They are making their money from their overpriced tutorials.
To stop you from falling for these tricks, you need to know realistic figures and return rates when trading forex. Professional traders experience a return rate of around 1-10% a month. Unfortunately, this is not as exciting as the significant 50% monthly returns you may be expecting!
Like any other business venture, when trading forex, you should be growing quite slowly. When you start, money will not be rolling in, and you may find it quite tricky. But this is expected when it comes to businesses. You will start to see more and more profits as you progress.
It’s unlikely that in your first few months, you’ll be able to leave your job and rely solely on forex trading. But as you grow in experience, skills, and size of your account, you will be able to make a living.
Where do I start?
Now that you know the realities of forex trading, you need to know what it takes to make trading your job. As a beginner, the first thing you need to understand is how trading actually works. Lots of research is required, so you’ve got a lot of homework to do before starting!
There are lots of trustworthy books and videos you can find with a simple google search. In your first stages, you want to know the basics and understand the critical concepts of forex trading. Before you even open a position, you need to make sure you fully understand what forex is.
Knowledge alone isn’t going to cut it. The best way to improve your trading skills is actually trading. Firstly, you need to find a trustworthy trading platform.
There are so many different options, so check reviews and make sure it’s a government-approved platform. Trading is already risky enough, so it helps to know your money is safe when no positions are open!
Once you’ve found your chosen broker, you’ll need to develop a trading strategy. A trading strategy is a plan or method that enables you to make profits in the current market conditions. To use a strategy, you will also need to be able to use indicators and graphs.
Once you enter the world of trading, you’ll discover so many different types of indicators and signals on trading graphs. Don’t try to understand all of them. Pick out a few that you can use in your strategy and make sure you use them accurately.
We recommend starting with a paper or demo account. Demo accounts allow you to trade in simulated markets. When trading in simulated markets, you are not using any of your real money. So you can practice your trading strategy without risking any money.
When you start trading forex, you’ll discover it is an emotional experience. Because you’re risking your hard-earned money, it can get stressful. Trading with your emotions will become a problem because you start to open and close positions based on fear or greed.
The key to trading successfully is sticking to the process. Try not to make rash decisions because you see your money increasing or decreasing quickly. Stick to your timing by entering and exiting the market at your planned points.
How much money can you make from trading?
This was probably one of your first questions when you thought about starting a career in forex. And of course, it’s a very valid question! If you’re putting in the work for something, it’s helpful to know how much you gain from it.
The amount you can make from trading forex depends on several different factors.
The first one we’ve already discussed is your rate of return. Professional forex traders return around 1% to 10% a month. So if you’re a beginner to forex, 1% to 5% is a good target to start with.
It’s important to remember that this isn’t a constant figure, and the amount you make in a month will fluctuate a lot. You’re risking some of your capital when you trade forex, so it’s impossible never to lose money.
No matter how good you are at trading, you will still lose on some positions and even go through long periods of losses. So you will not see a constant increase of 5% in your account every month.
Some months will be higher than this, and some months you may even lose money. Losses are inevitable, but you should still be making gains and growing your account in the long term.
The second big factor of your profits will be how large your account is. People who have legitimately made riches from forex will have huge forex accounts with millions of pounds in there.
If you have £1 million in a trading account and can trade with an average monthly return of only 1%, that’s £10,000 in one month. This is a very healthy profit that most people would love. This shows how professional traders can make a good living with a small return rate.
However, most people don’t have £1 million lying around to put into a trading account! When you start your forex journey, likely, you’ll only have around £1000 or maybe even a few hundred to start trading.
The reality is that your first few months of trading will not be enough for you to make a living from. Even at a 10% monthly return rate, trading with £1000 will only give you a return of £100 a month. After you’ve done the maths, you’ll discover that you won’t be making that much money at all.
To make a living from forex, you need to grow your account to six or seven figures. Once you have a large account, you’ll be able to make enough money to live comfortably from forex trading.
Growing your account requires years of hard work and research. All professional traders were beginners at one point, and they went through the same process. It didn’t take them a few months to get to that stage.
Making forex trading your profession isn’t an easy task. If you’re thinking about getting involved in forex, it requires a lot of research and practice. But don’t be immediately disheartened as it’s still possible to make big profits from forex trading.
Like any new business, it will take years of work until you are making significant profits. Focus today on making consistent growth, and in the future, you will have the healthy profits that everyone wants to enjoy.
This is why for the first few years, we recommend trading as a type of side hustle. Try and keep most of your profits instead of taking them out every month.
This will mean you have a consistent salary that you can live from while also growing your trading account. If you’re consistent and stick to this process, you will have a large enough account to make a living from in a few years.