Trading forex for a living
Trading Forex for a Living
The Foreign Exchange market is the world’s most liquid financial market. For a long time, it has been a market that is comprised of a wide range of investors drawn from across the globe. However, the emergence of online trading has made the trade in Foreign exchange even more accessible to the masses, opening it up to a diverse range of individual traders looking to make a living by exchanging currencies. The market has now become more than just a playground for large corporate and investment banks. Learn more about how you too can earn a living by trading Forex.
Develop a System
The question on many new investors minds is: Is it possible to be successful trading Forex for a legitimate living? The simple answer to this question is For proof, you need to look no further than the millions of successful individual Forex traders scattered all over the world.
However, if you are going to be an individual who trades in Forex for a living, you will need to be ready to put in some serious leg work. What this means is that you should have the skills and patience to develop a successful trading system and to put in the time and effort to stick with it. Undoubtedly, you will need to learn many strategies along your way.
The edge is a term used in Forex trading but borrowed from the game theory. What it means is that you should work within conditions that are in your favour. A trading strategy that has an edge will ensure that you yield returns in the long term when trading Forex for a living, when compared to a strategy that does not have an edge.
An easy way to think about it is trying to gamble on the flip of a coin. The outcome of flipping a coin is regarded as a random walk. It is impossible to predict whether a coin will fall head- or tails-up. Whether heads or tails has come up has no bearing on the next flip of the coin.
However, trading on the Forex market is totally different: The people involved in the market will determine the direction of the prices in future. That is, supply and demand will impact the prices of the assets. In addition, past and current prices have a bearing on the price movement in the future so it is important to take these elements into consideration when trading.
How to Earn a Living from Forex Trading
If you are planning to participate in trading Forex for a living, you have to treat it like your legitimate profession. You should examine what your trading motivations are as well as the type of trader you are – such as, cautious or a risk taker. Also, take the time to determine which Forex currency pairs you wish to trade and educate yourself about these currencies. For example, this could be taking the time to review what impacts their price movement.
Once you have established a system that works, you should stick to it and keep a meticulous record of both your profits and losses. Keeping a spreadsheet will help you to establish your exact performance. People starting out in the business are often reluctant to examine how much they have lost in trading, and end up over estimating their performance. You must always be honest with yourself about your successes and failures if you are trading Forex for a living. Also, remember that there will be losses – even the most professional traders lose sometimes. If you cannot afford to lose any money, you need to assess if Forex trading is right for you.
In the final analysis, can you trade Forex for a legitimate living? Well, what you need to know straight off the bat is that it is not easy. It is nearly impossible to generate enough profit as an individual Forex trader to support a millionaire lifestyle. While it is not impossible to earn such gains, they are rare. What you need to aim for is making consistent returns that can support both your capital outlay and your cost of living. This is achievable as long as you are ready to work hard and to be patient and consistent.