The idea of earning extra money from home is very attractive. However, most traders have trouble making money on Forex. Investing in the stock market and trading currencies is a risky activity and not everyone can necessarily win.
First, a trader has to figure out how to be profitable, which generally comes down to creating or adjusting one or more trading strategies to suit his personality, trading hours, earnings, and level of risk.
Any strategy can and should be tested with historical data before going live. We must also check its effectiveness rate. But we must be careful, past results are not 100% representative of what will happen in the future.
➤ Second, a trader must develop a mindset that allows him to continue with his strategy consistently. This second includes most of the article, since the psychological factor is one of the reasons why many people stop trading Forex after their first losses.
Next we are going to offer a series of tricks to have more options to make money in Forex.
Don't get obsessed with making money on Forex
Knowing that we all operate with the goal of making big profits, will you be able to stop obsessing over it?
Like it or not, one of the biggest obstacles to being profitable in trading is ambition.
▶ A good starting point is to forget about unrealistic goals. Of course, there is a vague statistical chance that you will make a profit with some quick trades, although in real life this method only brings the total loss of your funds over time.
Beginning intraday traders who follow short-term price movement are the ones who follow this alternative.
The number of traders who trade following these steps is high and 9 out of 10 lose everything in less than 90 days. Do you want to belong to that group of average profitability in Forex?
If a trader sets a high monetary goal, he is subjected to great emotional pressure that causes a large number of errors such as excessive trading. We will talk a bit about this later.
Instead of concentrating on money, try to focus on learning the trading strategies and in general, the tools available to each trader. Review the techniques that make sense to you and think about how to combine them with a strategy that makes sense. Study how the markets behave. You will be surprised how much you really have to learn to achieve consistent profitability.
In fact, while we're at it, don't ever leave the learning curve. The world is changing, just as the markets do, and if you want consistency, you must adapt too.
Trading in excess in Forex will not give you a greater Profitability
Making money investing in Forex is likely associated with opening a large number of trades. However, operating in excess is the result of seeing opportunities that do not really exist in the market, it is the trader who wants to see them in order to reach the objectives that were set from the beginning.
There are two ways in which a trader trades in excess: when it is done too frequently or too much volume.
By following both ways you will not be able to generate consistent profits in Forex.
1️⃣ We are going to talk about trading too often. Warren Buffett in his famous speech on "How to stay out of debt" said about investing:
"You need discipline ... You have to wait until you see a good opportunity to hit, since investing is not a game you win with strikes. In baseball you have to hit balls that you may not like. In business you don't have to. than hitting anything. You can just sit back ... and if you don't like the prices you don't have to hit day after day after day after day and you will never get strikes. You can just wait for the right moment when you like the price and you know really what you do. There you can hit. "
If we apply this example in Forex it can help us. The bottom line is that the trader does not need to open too many orders, as the correct ones are enough. Just follow your strategy and don't trade when you shouldn't.
2️⃣ Now we will focus on trading with excessive volume. Many people say that leverage is to blame. Well that's true?
Forex brokers offer considerable leverage on trading accounts. In principle, this was done so that traders could obtain profitability in Forex from small investments, which allowed greater accessibility to trading for all types of people. However, in practice, the high leverage quickly caught up with beginning traders, who suffered heavy losses as they were tempted to maximize their profits.
As always, the importance lies in the details. High leverage is not a bad thing in itself and allows you to trade larger volumes, leaving traders with less free margin to use in the event of accumulating losing trades.
↳ Higher volumes represent a higher value in the pip. However, it is the person who has the option of using an excessively high volume that increases their probability of receiving a margin call.
In any case, the lesson here is:
➠ Make sure you understand all the risks involved in trading before you start trading
➠ Avoid trading too much and always try new trading systems and strategies on a demo account, without any risk.
Nobody always makes money in Forex
Having an acceptable average Forex profitability has nothing to do with winning on all trades.
Closing all trades at a profit is simply a myth. We are talking about how to be consistently profitable on Forex over a set period of time. A long period of time. Say, one year.
Some professional intraday traders may have constant returns every day, but even they would not be able to display a trading report that does not have a single losing trade. If you are a sore loser, you still have a lot to learn.
Successful traders with decades of experience confess that less than 40% of their trades are profitable. In some cases the figure is reduced to 20%.
▶ The trick is that profitable trades cover losses and leave profits for the trader ◀
It takes great mental toughness to admit miscalculations that were made (if your strategy supports it) and close a losing trade early with little loss.
On the other hand, it takes a similar strength to maintain self-confidence and be patient and take advantage of the trend until it ends and not close a winning trade too early.
Get organized to be Profitable in Forex
There has been a lot of talk about trading discipline, but organization is rarely discussed. The order of things leads to consistency, which is the main topic of this article.
It all starts with the trading routine. You need a strict plan that covers most of your trading activities and helps you minimize random factors. If you think you don't need a plan, you are wrong, because you really do!
Many beginning traders develop bad trading habits. For example, they may oversold once, get lucky, and double their account balance in just a few trades.
Can bad trading habits be profitable? Yes. Consistently profitable? Not at all
After one of these traders wins just once, a negative trading habit is reinforced that is almost impossible to break. How could this person operate carefully knowing how much they could earn if they are equally lucky? All traders think they are lucky, until they find out that it is not true.
Reinforcing proper trading habits is one of the answers to how to be consistently profitable in Forex trading.
Also, the good news is that there is no maximum profit in Forex, it just depends on how consistently profitable you are.
How to make money trading currencies
The easiest way to answer is to think about what you would do with your own business. When you decide to start a business, you don't just invest in the first idea you hear, right? You look around and consider various options, because you know that investing is not done at random.
To do the job properly, you must plan, set goals, check progress, and budget.
The same principles apply in trading. As with achieving your life goals, achieving your Forex goals requires you to apply yourself with effort, focus, and determination.
As Vince Lombardi said, "the only place where success comes before work is in the dictionary." When you Google queries such as: make money in Forex, robots to make money, you can find all kinds of scams that offer you to invest money with them. Pay attention to these types of proposals and beware of overly attractive investments. The proverb "too good, too bad" applies to investing in markets as well.
❗ The story you hear about a Wall Street guy making $ 10 million a year may be true. But what is not mentioned in the story is that it manages billions of US dollars. The $ 10 million represents less than 1% of the total account he manages. Compared to a $ 1,000 account, this equates to a return of just $ 10 per year❗
No trading system can help you change your standard of living with a small deposit. It is very important to think in terms of ROI if you want to keep a cool head. Knowing the risks and returns of different classes of financial assets can help.
What is the Average Profitability in Forex possible
The average profitability in Forex is calculated with the following formula:
▶ Profitability = Net profit / Initial investment
The profitability in Forex is expressed as a percentage of the initial investment and it is very important to talk about the return (in English ROI - Return on investment) instead of thinking about a profit or absolute amount in dollars.
➤ A profit of $ 100 is a very good return on an investment of $ 1000, because that means we could get a return of 10%.
➤ The same sum of $ 100 over a $ 100 starting capital means an ROI of 100%. It is a very promising return, but it also means that the trader has taken a lot of risks and that in the long term it is very difficult to obtain returns above 5%.
There are many traders who think that a combination of good capital management and correct strategy can help them make money in Forex ... and certainly some do.
But most can also bear considerable losses. For most professional traders, the average Forex return is 1 to 10%.
Remember: you will not make a profit in Forex if you do not make enough effort to improve your knowledge in trading. We recommend that you prepare and read everything you can, before starting to operate.
One possibility to collect amounts without risk is to sponsor and work as a trading affiliate for online brokers. If you have a website or if you know people who trade online, you can take them to a broker to earn money as an affiliate.
Get Profitability in Forex- Conclusion
In conclusion, it is not always going to be possible to make money on Forex. However, it is possible to obtain a return over time. Therefore, to finish we offer you a series of tricks to achieve a rising equity curve:
✔️ Get rid of expectations
✔️ Choose a strategy that you like
✔️ Make sure you have strict conditions to open and close trades
✔️ Test it with historical data until you trust it
✔️ Always follow it, remember that it was profitable in your tests
✔️ Don't over-trade! Never, ever, under any circumstances!
✔️ Take control of everything to analyze your operations
✔️ Measure your progress in the long term, instead of considering your successes or failures in the short term
Repeat this exercise and you will inevitably end up in the relatively small group of successful traders. Remember that what matters is what happens in the long term!
One more thing! Do not stoop when operating. Research shows that people who stoop are less effective at solving logical problems than those who sit upright.
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