How Much Money Can You Make Trading Forex?
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One of the most common day trading techniques is to trade foreign currencies on the foreign exchange - aka forex - market, because it doesn't require a huge upfront investment of capital to start trading. It also trades 24 hours a day on weekdays and offers significant potential for profit due to the leverage associated with forex brokers.
You're sure to have come across forex trading as you look for the right option for you, and you have probably encountered forex traders showing off the luxury lifestyle it has afforded them, but you are probably left asking one question: "How much money can you make trading forex?" Well, there is no simple answer to this question, and ultimately it comes down to the person doing the trading.
A complicated answer
You will have seen forex traders demonstrating varying levels of success, but you can't compare yourself to them. There are many factors that influence a person's success in forex trading. Account size, risk management and appetite, trading strategy - the variables are many, and everyone is different. There are no guarantees in this business; there are only probabilities and possibilities, and even the most accomplished traders won't make the same profits every single month. Two people doing the same thing could make vastly different amounts of money. But there are some things you can focus on to maximise your chances of success.
No-one ever made a success in any career by having absolutely no idea what they are doing. You wouldn't become a plumber without having taken the time to learn about everything you need to know to do the job - if you did that, you'd quickly make a mess of every job you go on and your career would be in tatters. The same is true for forex trading, particularly if you are completely new to the markets with no knowledge of how things work.
The forex markets are complex, and the ways you can engage with them require some learning to understand what you are doing - without a little training and research, you will find yourself lost in an ocean of data without a clue how to use it. Many traders educate themselves by trial and error, making moves in the markets whilst reading disparate online guides that they can slowly put together to gain a more complete understanding of what they are doing. This is an inefficient method of learning that won't necessarily teach you the fundamentals or the best strategies for you to focus on. In short, it sets you up for failure unless you are fortunate or happen to have a natural instinct for the industry.
A far better option is to take a training course in forex trading. Trading Education offer a free, comprehensive training course that will teach you everything from the basics right through to advanced trade strategies and areas to focus on. You will learn things like how to read quotes, the difference between going long and short, bids, asks and spreads, knowing when to buy or sell, trading margins, hedging and many other things you cannot afford to not understand. If any of the terms listed above are unfamiliar to you, you are not ready to start forex trading.
You might also like: Are There Any Free Forex Trading Courses?
If you want to become a trader who is consistently profitable, one of the most important lessons to learn is to focus on the process rather than the profits. No successful trader has got where they are by thinking only about how much money they can make each month, in fact, it's more prudent to be concerned with how much you might lose, and taking action to protect your capital. It's the small things that make the difference, and focusing on the process will help you grow an account over time.
You can find out more about discipline in this article.
Once you have the education to know about good practices, risk management, trading strategies, knowing when to buy/sell and all the other components of successful trading, you are well positioned to move forward with your forex trading. But you will need to be prepared for a lengthy process of making small trades, waiting patiently for quality setups and not being swayed by the news when you trade. Success in trading is about patience, consistency and discipline - good things take time, and the profits you dream of will come your way if you keep paying attention to the process.
A healthy starting balance
Of course, one of the sad truths about the world of finance is that if you already have a lot of money, it is far easier to make a lot more money. This is because investing larger amounts of capital from the outset means that your returns will always be higher. If you aren't fortunate enough to be in a position to put a large amount of money into your investments early on, then your only option is to be disciplined and rely on compounding, which only yields results with time.
Find out more about compounding in our article here.
The money is there to be made, but the only way for you to make it is to approach the process the right way.
See also: 7 Key Tips on How to Start Trading Forex
The bottom line
So, back to the question of "How much money can you make trading forex?" There really is no simple answer to this. If the question is "How much money can be made?" then the answer goes into the millions. But the question asks how much YOU can make, and the answer to that is entirely down to you.
If you are prepared to undertake a complete forex trading education, learning everything from the basic fundamentals right through to advanced trading strategies, then you are getting off on the right foot. If you are prepared to take a patient, disciplined approach that focuses on the process, waiting for the right moves and gradually compounding your earnings, you will reap the rewards in the long term.
And if you are fortunate enough to have a large amount of capital to invest from the outset, you have a good chance of experiencing greater rewards earlier on - be warned, though, you are also vulnerable to experiencing the biggest losses if your strategy isn't right. There are people trading now making no profit, and there are people making millions. How much you can make is down to you.
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