Most beginning Forex traders will commonly ask about how much money they can make Forex Currency Trading as they learn more about this lucrative market. Naturally, you want to make money (and, a lot of it) in your Forex Currency Trading. That said, it is very difficult to answer this question because there are many factors that play into how much money you can actually make in the Forex Currency Market:
- What is your tolerance for risk?
Forex Trading offers plenty of risk due to leverage and volatility. If you don’t have a plan and trade with a solid understanding about leverage and equity management, you will encounter significant losses. Are you prepared for this?
- How much money do you have to begin with?
The size of your initial forex trading account will dictate how much money you can make. In order to be a successful at trading currencies for profit, you must practice proper money management. That means, if you start with a small account of $300, you should only trade micro-lots, which will not result in making you a lot of money from the get go. That said, learning to profit on a micro account is the best way to learn so that when you upgrade to a standard account, you will be primed to reap in plenty of profits.
- What are your expectations?
If you expect to deposit $5,000 into a mini account and hope to make $15,000 per month out of that, you are in fantasy land. Can it be done? Yes, it can. But most traders fail and this is fact for a reason. It is not easy to trade the FOREX market. You must have a lot of practice and a good education to back you up. With these two ingredients in place, you will know why the above expectation is unreasonable. Emotions are hard to control when trading and you have to let the market bring the trades to you and not the other way around. With $5,000 in a mini account, you will have to put on a lot of trades to reach your goal or trade more mini lots, which will put your loss ratios well above where they should be (see: understanding risk in forex trading). It would be a recipe for disaster and you will simply loose money, and along with your capital all your hope. Sadly, this is when most traders quit and file away their dreams. If you play this market correctly and go through all the motions, trade with proper money management, etc. you will not quit and there will be a great future ahead.
- Can you execute trades without emotions and follow your own set of instructions?
In continuing with the above, if you can’t follow your own rules and have discipline (which come from education, time and practice along with your own tendancies), then you will loose money in the Forex Market. It’s just that simple.
- How do you feel about losing money?
You will loose money, guaranteed. That does not mean that you cannot make money in the Forex market. You can be right only 40% of the time and be wrong 60% of the time and still make money. The problem with loosing 60% of the time for some traders is that they feel defeated with each an every loss, as if each loss is going to make or break them. Feeling this way when you are actively trading is dangerous because you will abandon good judgement and make poor trading decisions. Whereas, if you accept losses as a natural process of trading this market, you will move onto subsequent trades with the right mindset and that is where your success lies.
Notice how three out of the five points above discuss mindset and not trading skills in general. You can learn skills easily but getting your emotions under control is the hard part. Yes, you must have a solid Forex Education to back you and a good run of practice is essential. But, when you are out there trading live with real, hard-earned money, you better have your head screwed on right if you plan to make money (rather than loose it).
The fact is, 90% for Forex Traders fail and loose money.
So how do the remaining 10% make money? Well, for starters, there are investors making a killing, but these folks have a large account to play with and have a huge tolerance for risk. And, most importantly, they have the right mindset and emotional control required to make a lot of money in the Forex market.
Master the above and you will be miles ahead!