A frequent question in those who undertake in the world of currencies is: Do people make money from Forex? That’s to say, the idea of earning extra money from home is very appealing. But, most traders have problems when it comes to earning money on Forex. Investing in the stock market and trading currencies is a risky business. And not everyone can necessarily win.
First of all, a trader has to figure out how to be profitable. This usually boils down to creating or adjusting one or more trading strategies. And that’s because it suits your personality, trading schedule, profits, and risk level.
In short, it’s necessary to test any strategy with historical data before going live. We should also check its effectiveness rate. But we must be careful, past results are not 100% representative of what will happen in the future.
Secondly, a trader must develop a mindset that allows him to continue with his strategy. This second one encompasses most of the article. And the psychological factor is the reason why many people stop trading Forex. Especially after their first losses.
Below we are going to offer a series of tricks to have more options to make money from Forex.
Make money from Forex: don’t get obsessed with it
Knowing that we all trade to make big profits, will you be able to stop obsessing about it? Whether you like it or not, one of the biggest obstacles to being profitable in trading is ambition.
So, a good starting point is to forget about unrealistic goals. Of course, there is a vague possibility that you will get profitable with some quick trades. Although in real life this method only brings the total loss of your funds over time. For example, beginner traders. They use to follow the short-term price movement. So are the ones who follow this alternative.
The number of traders who trade following these steps is high and 9 out of 10 lose everything in less than 90 days. Do you want to belong to that group of average profitability in Forex? So, if a trader sets a high monetary target, he puts himself under a lot of emotional pressure. That’s why it causes a lot of mistakes such as overtrading. We will talk a little more about this later.
So, if you want to make money from Forex, try to focus on learning the trading strategies. And tools available to each trader. Firstly, review the techniques that make sense to you. Secondly, think about how to combine them with a strategy that makes sense to you. Also, study how the markets behave. As a result, you are going to learn how to achieve consistent profitability. While we’re at it, don’t ever give up the learning curve. The world is changing, as are the markets and if you want consistency, you too must adapt.
Make money from Forex: overtrading will not give you a higher profitability
You likely associate the fact to make money from Forex trading with opening a large number of trades. But, trading in excess is the result of seeing opportunities that do not exist in the market. In other words, it is the trader who wants to see them reach the objectives that were set from the beginning.
Likewise, there are two ways in which a trader trades in excess:
- When it is done with too much frequency.
- Or too much volume.
By following both ways you will not be able to make money from Forex. But let’s talk about trading too frequently. Warren Buffett in his famous speech on “How to Stay Out of Debt” said about investing:
“You need the discipline… You have to wait until you see a good opportunity to bat because investing is not a game you win with strikes. In baseball you have to hit balls you may not like. In business, you don’t have to swing at anything. You can just sit back… And if you don’t like the prices you don’t have to bat day, after day, after day, and you’ll never get strikes. You can just wait for the right time when you like the price and you know what you’re doing. Then you can go to bat.”
If you apply this example it can help you to make money from Forex. The conclusion is that the trader does not need to open too many orders, as the right ones are enough. So, follow your strategy and don’t trade when you shouldn’t.
Some last lessons about the chance of making money in Forex
Now we will focus on trading with excessive volume. Many people say that leverage is to blame. Well, is that true? Forex brokers offer considerable leverage on trading accounts. So that traders could get profitability in Forex from small investments. And that’s made trading more accessible to all types of people. But, in practice, the high leverage had an impact on beginner traders. As a result, they suffered large losses. And that’s because they were tempted to make money from Forex.
However, no trading system can help you change your standard of living with a small deposit. It is very important to think about the return on investment if you want to keep a cool head. Knowing the risks and returns of different financial asset classes can help.
In conclusion, it will not always be possible to make money on Forex. But, it is possible to earn profitability over time. Thus, to conclude we offer you a series of tricks to achieve an increasing equity curve:
- Get rid of expectations.
- Choose a strategy you like.
- Make sure it has strict conditions for opening and closing trades.
- Test it with historical data until you trust it.
- Always follow it, remember that it was profitable in your tests.
- Don’t overtrade – never, ever, under any circumstances!
- Keep track of everything to analyze your operations.
- Measure your progress in the long term. Instead considering your successes or failures in the short term.
Repeat this exercise and you will end up in a small group of successful traders. Besides, you finally can make money from Forex. And remember: it’s what happens in the long term that matters!