One intriguing question forex skeptics regularly ask is Forex Trading Profitable?. Every trader has to go through this stage for them to be successful in this market. Interestingly, you can only know if you venture into trading because most people think that traders do “lip service.”
Take a moment and think if a market that trades over $5 trillion a day won’t be profitable. If it is so popular, then why do people still believe that trading forex isn’t profitable? Well, those who question the profitability of trading haven’t been successful in it. Then one can conclude that it is not about whether the forex market is profitable or not but how you trade the forex market to become profitable.
Things to Consider to Trade Forex Profitably
You must understand that to win in this game of trading, there are certain things to put into their right perspective.
Forex Trading isn’t for everybody
Did that statement hit you hard? Yes, the same way everyone cannot be a doctor, so it is with forex trading. The forex market is a high-risk market, and to make any profit, you must be willing to risk – a risk that may also lead to a loss. Before venturing into forex, you must ask yourself if you have what it takes to accommodate risk because your capital is at risk.
You cannot be profitable in all trades. Do you have room to accommodate losses – consistent losses? Every trader goes through this loss phases once in a while. But what separates a professional from an amateur is the number of wins over their losses over time.
If you think you have what it takes to dissect this market, then you must implement a good risk management plan to help minimize your loss.
Develop a Working Trading Strategy
We didn’t just say a trading strategy but one that is working. For you to know a working strategy, you must have backtested it overtime. You must find a trading strategy that gives you a win rate of 70 to 85% on each currency pair. One mistake most traders make is to use the same plan for all currency pairs. If you can find a different strategy for each market, that will be perfect because each currency pair is unique.
To trade forex profitably, you need discipline, patience, and a workable strategy to keep your focus. Additionally, your emotion plays a vital role because trading is 90% emotional, which is why many traders fail. To profit in forex trading, you need a good strategy, right mindset, and sound risk management in place. With these, you are working closer to living the life you have envisioned. There are many advanced strategies but it is important to always take a look at a live currency strength meter to check which pairs are trending.
Always use a Stop-Loss
Never forget this, like your name. Irrespective of the strategy you decide to implement in your trading, stop-loss shouldn’t be neglected. A stop-loss is like a thermometer that tells you something is wrong, and you need immediate attention. However, in forex, it means your analysis is wrong at the moment. Whenever price gets to your stop-loss level, the trade closes automatically. In other words, a stop-loss helps minimize your loss. This doesn’t mean your stop-loss will be frequently hit if you do the right thing.
Keep abreast with recent News
Various things, including news, move the forex market. Staying updated isn’t negotiable because of the frequent news releases. Most of the moves you experience in the market take place because of announcements or news events. They are sometimes called fundamental news. We know there has been debate ongoing as to which to use between fundamental and technical analysis. Well, take the two with you if you want to be a profitable trader in forex market in the long run.
In other words, don’t rely on your technical indicators alone. Check the news calendar to see if there will be news that may influence a currency pair. It doesn’t matter if you did a fantastic technical setup, fundamentals can spoil everything for you. Therefore, ensure both complements each other to stay ahead of the market.
Keep your emotions in check
As simple as this may sound, it is imperative to abide by them. For new traders, it is quite hard to keep their emotions in check. Your emotion is your principal enemy in trading and must be dealt with appropriately. Some traders see forex as a game where they are fighting against an opponent they must beat. Well, those who do this are wrong because forex isn’t a game. Forex is a combination of discipline and analysis to win.
Some traders get angry when the market goes against them. Well, experienced traders will advise you to always rely on whatever analysis you do and judiciously follow your rules. There is no other way to be profitable in forex trading than developing your own rules and sticking to it. Emotion is deadly, as it can spoil your trading experience. While sad emotions can affect your market perception, so also will too much excitement and happiness cause you harm.
Conclusion: Is Forex Trading Profitable?
There is no rule to being profitable in forex trading. It is all about discovering what works for you and implementing it. There is nothing like a holy grail to forex trading if you want to be profitable. There is no back door to forex trading unless you want to depend on others to provide you with signals. It is quite easy to be profitable in forex trading even though many doubt it.
Building a successful career takes time and dedication to actualize. Why do you think that forex trading should be different? How profitable you will be trading forex all depends on you and the risk you are willing to take. Profits and losses are unlimited, but it depends on your strategy, risk appetite, and understanding of the forex market. If you are new, don’t look at making money but building your skill because, over time, your skill will bring the cash you need. Equip yourself with everything you need to trade forex profitably and change the narrative for those who believe that forex trading isn’t profitable.
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