The majority of us get into forex trading to make money, no questions.
However making money needs to be examined and broken down further as it can be viewed as building an account or as generating cash-flow.
Firstly though, for all the newbies I need to stress that forex trading is not a one-way ticket to an opulent lifestyle, exotic cars and waterfront mansions. Do not believe all the spruikers that say ‘do my training course and in 6 months you will be living off your trading’ or ‘buy my system and make 100% per month on your account’ - it is all rubbish. Even the people that publish amazing results of their system are using smoke and mirrors, believe me, I have fallen into the trap in the past and even after doing my research and tracking “verified” results, I have still been left disappointed and out of pocket. In fact, these forex ‘elixirs’ are preying on the dumb money out there looking to get rich quick and am sure people go from one to the other to the other looking for that non-existent holy grail source of wealth.
If you are a professional trader then your income is covered and it is assumed that you have sufficient cash-flow from your trading activities to keep your lifestyle ticking over day to day, however the majority of us traders are hobby traders and aiming to get to the stage whereby trading covers our living costs and more.
OK, so let’s break it down. Whilst there are systems out there that claim to make thousands or hundreds of percent return each month, we know that this is not reality. A fair assumption would be that a forex system or forex trader can make 5% per month return on average. So to make an average monthly wage (western countries) you would be looking to require an account of at least USD$50,000 keeping in mind that you would still need to pay taxes.
Next issue is that most of us do not have a lazy USD$50,000 sitting around and that can be risked to put on forex trading. Alternatively you may not have sufficient time and energy to commit to trading that size of account. Therefore you have two options, either to put a smaller amount of money to work following someone else’s system, or you trade your own account and build it up with compounded returns month on month.The first option of following someone else is fine if you do not have the time however keep in mind that there are costs associated with this which eat into returns. Then when trading your own account you really need to compound your returns so that one day you have a larger sum to trade and draw from.
If you do have USD$50,000 account and have your tested trading plan and strategy in place then you can draw down your profits every month and keep your initial deposit as your float.
The point of this writing is to highlight that returns from forex trading are not isolated to your account returns. Whilst the ideal situation to be in is to be paid to trade whilst trading and accumulating you own account, you can also make money through other related actions including;
Being paid by followers and trade copiers - This process involves publishing your trading account through a sharing service where other people can subscribe and follow your trades. Ideally you need 3+ months of consistent history and draw-down less than 20%.
Subscribing to a Trade Rebate service - A trade rebate service is an entity that is set up as an introducing broker with many brokers and receive a commission for every trade placed. What they do is pass on the majority of the commission to the trader. This commission is not just based on the a portion of the trade spread, it does also cover commissions from ECN accounts.
Pay to follow another complementary system for additional account returns - This does sound counter intuitive and whilst this is not idea as you are opening yourself up to potential greater risk, and also costs, following a system that is making money and complementing your trading strategy could work to supplement your account growth (and deduct after costs for cash-flow).
Trade other people’s account for a success fee - This area will most-likely require compliance depending on what country you live in. You may have seen PAMM and MAMM accounts listed under broker offerings and these are trading platforms for the management of multiple accounts. However if you can deliver a reliable and consistent return to clients then the cash-flow will follow in success fees.
Am sure there are more, you could sell training courses, publish YouTube videos and get advertising income, you could build up a following on Instagram and recommend products/services with which you are an affiliate. The list goes on…
At the end of the day it is about being realistic. The reality is that only a tiny percentage of forex traders make the big bucks. A few percent make an ok living. A larger percentage break even. The majority lose money. Use professional golfers as a comparison. Only a very small percent are at the elite level and making the top dollars. The majority are wanna-be hacks and hobbyists that spend way too much on equipment and club fees! Don’t get me wrong, there are other benefits in playing golf! (exercise, community, personal challenges etc..)
Only a very few will ever make billions trading forex. However, the success of the top traders shows that you can get rich trading forex. Even the best traders will lose money sometimes, but if you can start to regularly turn a profit, then you are well on your way to success.
Basically, it's a well-known fact that people come to forex trading because of strong desire to get cash. I believe that traders have to set clearer objectives. I mean, for example, when you enter trading activity, you decide that the matter for you is to earn 20% to your deposit within a month. So, in this case you will be able to distribute load correctly and you will have more chances to become successful. Forex trading doesn't like chaotic moves and likes the compliance with various general and golden rules of trading. So, be ready that you must set objectives in order to have a strict plan which you will follow.
HIGH RISK WARNING: Foreign exchange trading carries a high level of risk that may not be suitable for all investors.
Leverage creates additional risk and loss exposure. Before you decide to trade foreign exchange, carefully consider your investment objectives, experience level, and risk tolerance.
You could lose some or all of your initial investment. Do not invest money that you cannot afford to lose. Educate yourself on the risks associated with foreign exchange trading, and seek advice from an independent financial or tax advisor if you have any questions.
Any data and information is provided 'as is' solely for informational purposes, and is not intended for trading purposes or advice.
Past performance is not indicative of future results.