Can I Make a Living Trading Forex?
Brokers advertise forex like it is one easy and sure way to financial freedom — the sports cars and the beautiful Caribbean beaches with half-naked ladies. Besides, with that nagging boss of yours, you’re probably wondering if forex trading can be your lucky escape?
While it’s true that you can make a living, trading forex; make sure you have a solid plan before you ever think of quitting that 9-to-5 job of yours to start a journey in forex trading. Trading is a serious business and like any other person making a career change, you must have a plan.
Get Adequate Forex Training
The first thing you have to do in your forex trading journey is to get adequate training. You may start with books. Pick a couple of basic books on forex trading and read. With this, you get to learn the language of forex — pip, lot size, margins, margin call, leverage, price action, indicators, technical analysis, fundamental analysis etc. You can also learn those by reading the materials on Babypips.com. Then pick more advanced books on technical, fundamental analysis, money management, risk management, and trader’s psychology. Read and digest them thoroughly. Watch videos of live trading and, see what traders do: how they enter and exit trades, how much of their account capital they use per trade, how they manage their trades, and how they scale in and scale out of trades.
Start watching business channels like Bloomberg and CNBC to get a feel of how news can affect the market — fundamental analysis. You may also visit their websites and similar sites such as Reuters, Investing.com, Wall Street Journal, Financial Times, Forexfactory, Dailyfx etc. Open a demo account and practice as much as possible until you’re consistently profitable. With all you have learned so far, you can now develop strategies suitable to your personality; so, come up with a trading plan. This plan must cover your strategies — criteria for trade entry and exit, stop loss, profit targets, trailing stop — as well as money management rules and preferred trading session.
Have a mentor. You can enroll in a trading course organized by a proven forex veteran and let him or her mentor you. Alternatively, you can join traders’ forum on websites like Forexfactory and Investing.com; find a consistently profitable trader whose style suits yours and ask him to guide you.
Trade Part-time First
Before you quit your job and pursue a full-time trading career, make sure you have been making a consistent profit trading part-time in ‘live account’. Demo-trading is not enough. I bet your emotions will get in the way when money is on the line. You need to trade live account to be sure trading is for you. Forex is a 24-hour-a-day market, so, you can trade part-time without quitting your job.
Set aside Sizeable trading capital
To live off your trading profits, you must have a sizeable trading capital. My dear, this is very necessary to make sure that you can aim for realistic profit without risking too much of your trading capital per trade. As a rule, do not risk more than 1% of your trading capital per trade. How much is a sizeable trading capital? Hard to tell, your trading style will determine. If you’re a swing or medium-term trader with trading setups that require 100 to 150 pips stop loss, you will surely need a bigger trading capital than a day trader with 20 to 30 pips stop loss; were you to obey the 1% of trading capital per trade rule and still trade a reasonable lot size.
Come to think of it, being a full-time forex trader most likely means you’re going to day-trade. For a day trader, I believe a $6000 to $10000 account is quite reasonable to start with. I will always advise you to secure double of it. Start trading with one and keep the other as a back-up trading capital in case you make a fatal mistake early in your trading career, as is very likely for a newbie. With $60 risk (1% of $6000) per trade, you can trade 0.2 lot with 30 pips stop loss and 60 pips take profit. If you have a strategy with these parameters and you get about three setups per day and win 50% of your trades, you can potentially make about $1800 a month which you can live on.
Have a sizeable savings
Truth be told, as a newbie you are more likely to trade for months before you start seeing any meaningful profits. Even if you have the best strategies, it takes time to learn the emotional control needed to succeed in forex trading. So, when you embark on this adventure, you’d better have large savings you can live on for the first one year or more. This not only ensures that you have your basic needs; it takes the pressure of instant profit off your trading. That’s a big score on your emotional control.
Consider Getting a Side Hustle
Yes, your savings can take care of you for more than a year; you may still need to get a side hustle. There is no certainty that you will be reasonably profitable by then. Moreover, you don’t have to watch your chart all day. It can be very boring and potentially dangerous as you can enter a trade out of boredom when your setup hasn’t occurred. Having an online side hustle like blogging, freelancing, affiliate marketing, etc; not only earns you some extra bucks, it helps you maintain your trading discipline.
Plan how to manage your trading profits
When you finally become consistently profitable, you will need to have a plan on how you manage your profits. You will need to reach a balance between growing your trading account and withdrawing profits for your normal upkeep. While you need the profits to live on, you also need to grow your trading account so as to reduce the percentage of profit you will need for your upkeep in the future.
You see its better to have a percentage rule say 40:60 rule whereby you withdraw 60 percent of the profit for your upkeep and leave 40 percent for account growth. You will also need to decide the frequency of withdrawals — weekly vs monthly. In conclusions, it is possible to make a living, trading forex; if you approach it as a business and develop a solid business plan. Forget brokers’ adverts, trading will never make you rich overnight.
Claim Your $60 No Deposit Bonus Here
All you need is to have your live account verified!
Of course, you need to open a live account...
2 Brokers that we like A LOT!
USD30 from each Forex Broker Below.
Both Forex Brokers have excellent rating!
We use both of these brokers and proudly promote them!NOTE: Not all countries qualify for these bonuses. Terms and Condition Applies.
Other Analysis Today