How Can You Increase Profitability from Trading?

Last Updated February 24th 2023

10 Min Read

While the goal of trading forex is to generate a profit, this is an achievement that’s relatively rare in the marketplace.

More specifically, it’s thought that 70% of forex traders lose money actively over time, with this highlighting the forex market’s innate volatility and vulnerability to macroeconomic conditions.

However, you should never lose sight of the importance of profitability when trading forex. But what steps can you take to optimise your profitability as an FX trader? Let’s get into it!

Why is Profitability so Important?

Let’s start with the basics; as profitability should always be your primary objective when trading forex.

After all, you’ll have to commit your hard-earned money to pursue returns, while the level of risk associated with forex trading and the chances of incurring disproportionate losses (depending on your leverage) mean that you should always be focused on your bottom line as a trader.

If you intend to scale your efforts over time and eventually trade forex as a career, achieving profitability will also enable you to carry on learning and developing your skills. It’s also key if you’re to trade sustainably for any length of time.

How to Optimise Your Forex Profits

The question that remains, of course, is what steps can you take to optimise your forex profits? Here are some ideas to keep in mind:

#1. Choose the Right Currency Pairs: When you start trading forex, you should focus on one or two major currency pairs that are highly liquid and easy to buy, sell or exchange in real-time. However, you should look to diversify your FX portfolio over time, incorporating additional minor or exotic pairings that increase your potential returns while attempting to minimise your market exposure. Choosing correct pairs is a fundamental part of your strategy and one that has a significant bearing on your ultimate success or failure.
#2. Identifying Viable Trading Methods: There are various forex trading strategies available, which typically vary in terms of timeframes and whether they deliver short or long-term profits. Other viable forex strategies include copy trading, which enable you to automatically replicate the trades executed by selected investors who have a record of profitability in the marketplace. Social trading is a similar strategy, although this enables you to observe successful traders and borrow from this manually.
#3. Increasing the Time Spent Trading: We’ve touched on the importance of scaling your efforts organically over time, in line with both profitability and the experience that you gain. From a practical perspective, being able to increase the time spending allows you to pursue higher returns, whether you execute a higher volume of orders or spend more time engaging in technical or fundamental analysis. Having more time to research the market can also translate into greater efficiency and incrementally higher returns over time.

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