Many traders have at some point asked themselves if forex trading is a profitable venture. Of course, the reasoning behind this is that quite often you will come across traders who boast about being a full-time forex trader. Some even go as far as to say that they make a full-time living trading forex.
If you look at a few Youtube videos, you will find people boasting about how forex trading turned out to be so profitable that they became millionaires.
While there is no way to validate these claims, let’s look at the facts.
To answer the question if forex trading is profitable, you should ask if trading in general is profitable. One of the main differences between trading and investing is that with trading you are speculating in the short term.
This means that unlike regular investing, you are trading the short-term markets. This form of speculation requires a lot more attention to detail. It also makes you more prone to making mistakes which could affect your bottom line profit and loss.
An important thing to remember is that forex trading deals with the currency markets. Therefore, you always need to be on the top of the market in order to be consistently successful.
There are a few things that are most important to determining your forex trading success. These are outlined in the next section.
Three things to make forex trading profitable
Risk or Money Management: Risk or money management is often overlooked until a trader ends up losing all their money. Most often traders jump to a trading strategy instead of paying attention to their risk management. You can read about the importance of risk management.
The article outlines the risks with day trading or speculating and the overtrading which can affect the overall performance of your trading.
Trading Strategy: A trading strategy ranks second. Without a trading strategy in place, you are just gambling on the forex markets. A good trading strategy can help you to remove the emotions from trading. It enables you to be more disciplined in your trading approach and will tell you when to trade and when not to.
With a trading strategy, you are able to better understand the markets that you are trading. Read this article to understand more about the importance of having a trading strategy.
Forex Broker: Having a good forex broker can do wonders for your trading. Being able to fill your orders precisely and giving you good trading conditions are just as important. If you aspire to be a full-time trader, then you should spend time into researching for a good forex broker: JustForex review.
A good forex broker will ensure that you get the most competitive prices when trading and also ensures a level of safety and security of your funds.
After all, what is the point of trading when your funds are not secure or if you cannot trust your forex broker?
Is forex trading profitable?
The answer to the question depends entirely on you. Yes, forex trading can be profitable only if you dedicate enough time and discipline into learning the art of trading. It can take years before you can actually start to see consistent profits coming your way.
The bottom line before you begin to trade is to ask yourself what your ultimate goal is. If your only goal is to make money with forex trading, then chances are that you will lose your money very quickly.
Just as with any profession, you need to put in your time and effort in order to be successful. Forex trading is no different.