You can probably blame it on jetlag, but unable to fall asleep one night this week, I flipped on the television, and lo and behold, stumbled upon a late-night infomercial about forex trading. You know the ones, right? Where some “everyday Joe” proceeds to get rich quick trading, turning a few thousand dollars into a million or more in only about a year or so. I watched just long enough to see the broker or education provider—with their celebrity endorser in tow—happily and out of the goodness of their own heart, present Joe trader with a brand new sports car to commemorate his achievements.
Now that’s the dream right there, isn’t it? And honestly, clever marketing just like that is why a large percentage of new forex traders come into the market, searching for little more than an easy way to get rich quick. “It can happen for you, too,” they say, citing fairytales like that one, and famous stories like George Soros “breaking” the Bank of England to the tune of a $1 billion profit on Black Wednesday, September 16, 1992.
Some people have done it, afterall, which begs the question, “Can you get rich quick trading forex?” And while I’m sure you might expect just a resounding “No,” you know what, in the name of good fun, let’s play along! So, honestly speaking, here’s most of what would need to happen in order for you, the average retail trader, to get rich quick trading forex.
The various conditions needed to get rich quick trading forex sound a lot like some kind of mythical perfect storm, because even in addition to being “right” about a monumental market move, you also have to time the trade perfectly, and bet big on it…really big!
Being out in front of a huge and sudden price swing: Perhaps contrary to people’s perceptions, big market moves aren’t all that common in forex. Sure, they’re plenty memorable when they do happen, but 1%-2%, if that, is most definitely a normal trade outcome, and even 5%-10% is considered huge in forex. Individual share trades can do ten times that, for heaven’s sake! And, aside from predicting outlying macro events like interest rate changes, equity market shocks, or geopolitical factors in advance, which is understandably difficult, the kind of price action needed to get rich quick doesn’t come about often, and is almost completely unpredictable whenever it does.
Taking a colossal position size: The phrase “It takes money to make money” seems especially fitting here, too. You see, you don’t get rich quick by betting small. George Soros leveraged his entire hedge fund during that infamous run on the British pound (GBP), amassing a $10 billion position to earn such a sizable profit. Needless to say, for retail traders and our modest trading accounts, betting it all—even if we were foolish enough to try it—wouldn’t produce enough profit to get rich quick on just any market move.
Using loads of leverage: So if trading with account capital alone isn’t enough to get rich quick, there’s always the option of using borrowed money, or trading on margin. But the risks of doing so are well-known and the possibility of catastrophic loss is there, so in essence, why risk it? Some would while trying to get rich quick, and those are the traders whose careers come to very quick and abrupt ends because of it. I’d gladly sacrifice a miniscule chance to get rich quick just to keep from being in that class of traders, though, wouldn’t you?
I guess by now, it’s abundantly clear where I stand on this issue, but do bear in mind that I’m not just saying there’s no way to get rich quick without at least offering a more feasible alternative. To be quite honest, I’ll be the first to acknowledge that it’s not the small winners that add up over the long term and help escalate your account. It’s really the sizable winning trades that are presented every so often, but that don’t require undue risk, trading on margin, or betting your entire account to make work for you.
The answer, in my mind, at least, is mixing in an occasional reversal or countertrend trade, whenever one meets all the conditions of your trading strategy, that is. Now, that doesn’t mean spending much of your time and efforts trying to pick market tops and bottoms, but it does mean that when you do spot a valid reversal or countertrend trade signal, you have the courage and conviction to go with it, even knowing that it’s a low-probability trade. The payoff, afterall, is in the high reward potential.
Even one or a couple of those trades working in your favor can make your entire year, and because you’re trading your own strategy in the process, you can control risk and minimize any downside when, inevitably, some of these trades don’t go your way.
Taking frequent chances and big risks, every one of which could wind up being your last, is perhaps a way to get rich quick, but trading consistently for the long term and being alert for more lucrative reversal and countertrend signals is a way to get those desired results, but do so without the catastrophic risk.
In short, let go of any pipe dreams about using forex trading to get rich quick. But, to promote early success, and get on track to a profitable (and sustainable) trading career, join The Lazy Trader member community for education, timely trade ideas, and useful guidance you can use every step of the way. Click the banner below for details and to get started today!