To trade Forex for a living appeals to many, which begs the question is it possible? The short answer is yes day trading is possible and explains why many attempt it! Despite the challenges, there are solutions for those with the right approach. Find these out and whether you can trade Forex for a living!
The firm's main research and development office is based in Tel Aviv Israel. It originally specialized in Forex and indices spreadbetting and CFDs but has recently expanded in stock trading also. At the time of writing, eToro has 2.2 out of 5 star on Trust pilot. The comments suggest that the platform offers some impressive features but withdrawing money can be difficult. Having said that, some of the negative reviews appear to be rants rather than constructive criticism. This can be examples of traders losing money through their own recklessness rather than eToro's fault. You should therefore take this reviews with a pinch of salt. OANDA is a global financial services company providing advanced currency solutions to both retail and corporate clients all over the world. In this article, we are going to review this broker’s trading options, tools, platforms, spreads, commissions, security measures, and educational resources to help traders make the right choice. AvaTrade offers a wide variety of trading solutions (spread trading, CFDs, and social trading), and peace of mind with its comprehensive regulation, covering the EU, Australia, Canada and South Africa. Clients can use a variety of platforms for discretionary and automated trading.
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76% of retail investor accounts lose money when trading CFDs with this provider.
76.6% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing
76% of retail investor accounts lose money when trading CFDs with this provider.
If you want to trade Forex for a living you should see it as a project, which in its first instance requires learning how to trade. This is not a get rich quick scheme. Few traders really make it, as they set out without understanding the importance of discipline, patience and being realistic around the capital needed. Opening an account with just $200 will not get you far if you intend to pay the electricity bill each month. Hardest of all is discovering a strategy which works for you. A solid price action trading method is critical and will evolve with time. The market never stays the same, so why should your trading strategy not evolve?
Lazy trading consists of implementing a strategy and then letting it play out for you. It is the positive opposite of over-trading. To do so means understanding how to use the daily/weekly charts. Learning not to over-analyse opportunities presented to you, but trusting your trading strategy should become second nature. Learning the weekly charts first, which are less stressful than daily charts will allow you to make smaller, less costly mistakes. Best of all, this can take as little as 5 minutes a day once you get the hang of it. Once comfortable with weekly charts, you should look to progress to the weekly ones!
Until you are profitable over a substantial period of time, potentially a year or two, it is advisable to keep your day job! Generating enough profit to take money out of your trading business to pay the bills creates pressure and stress. This is on top of creating enough profit to re-invest and grow your business. You could have a bad month or a one-off event (such as a financial crisis) which wipes out a large part of your capital. Your attempt to trade Forex for a living will have been bought to a crashing halt before it even started in earnest!
Studies show that a single person must earn £18,400 a year in the UK to have a normal life. A parent in a working couple with two children must earn £20,000. You must not underestimate the pressure of trading on the Forex market. If the pressure to make ends meet is too big, you might end up entering into bad trades. Whereas if your main source of income is something else than Forex trading, you can execute trades without any pressure to perform.
Having a large amount of funds to trade should create larger profits. Realistically you will need hundreds of thousands to trade Forex for a living. For example, having a £1,000,000 portfolio and placing a 2% position which makes you a 5% return is £1,000 profit for that trade! A £200,000 portfolio where you place a 2% position, with a 5% return is £200 profit. The number of successful trades you place will decide how much capital you need. There is a saying that you need money to make money!
For those with smaller portfolios, the temptation to use leverage can be hard to resist. This can cause problems. The need to meet funding requirements could push you into taking more risk than you should. This can lead to bad trades and loss of capital. Without your capital, you can't trade Forex for a living.
Learning to see risk management as your priority rather than frustrating potential opportunities will keep you in the game! The larger the risk does not necessarily mean the larger the reward, but it can mean large losses. If a trade has a downside risk of 10% with an upside potential of 30%, then the 20% differential is attractive. This risk-based approach will mean you will pick only the most worthwhile trades. Trading can only be profitable if you don't start by losing money first!
We regularly preach discipline as without it, you will make mistakes. One of these is the tendency to over-trade. The desire to get involved and have your say can often lead to nipping a positive opportunity in the bud. Letting your trading strategy play out should be automatic!
To trade Forex for a living you will need a trading plan. This is no different to having a business plan for any normal business. You will need capital to trade with, as well as income to cover your costs. Patience will be needed to educate yourself for what is required. Above all, you will need to learn from your mistakes. A loser is someone who never learns from their mistakes. A winner is someone who learns from their mistakes so as to never make them again. Do you think you have it in you to trade Forex for a living?
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