It is not uncommon for people to dream of becoming self-employed and gaining financial freedom by supporting themselves via lucrative forex trading online. No more boring jobs, no wasting time with admin or the boss, endless meetings, and pointless emails. But is this a realistic ambition? And if so, how can it be achieved? In this read, we are going to give you an accurate scope of Forex trading, what you should expect, tips to be a smart trader, and how to make a living trading foreign exchange. After all, being forewarned is being forearmed.
The Importance of Foreign Exchange Education
The Forex market is continually changing, and so, if you plan to get into it, you need to comprehend the ups and downs. There’s no set of rules or formula to guarantee success in Forex trading.
Otherwise, we would all be rich. Instead, it’s a combination of numerous things, and to be successful, you need to be mindful, talented, and patient.
Discerning, this is the initial step in Forex learning. If you’re interested in learning how to trade forex online, there are numerous resources online, including comprehensive video tutorials.
Once you see how much money people are making, it can be tempting to rush through the learning process, but this is what leads to many failing. You must take a step back and take all the time you need to learn and advance in the trade.
You need to be able to analyze your performance and know the reasons behind your wins or losses.
With the basics out the way, let us dive into what you need to do to make a living trading foreign exchange:
Define Your Goals & Trading Style
Before you embark on any endeavor, it is vital to have an idea of your end goal and how you’ll get there. Consequently, it’s essential to have clear and concise goals in mind and then make sure your trading formula is capable of meeting these goals.
Every form of trading has its risk profile, which calls for an individual approach and attitude to trade successfully. For instance, if you can’t handle going to sleep with an open position, then day trading might suit you better.
On the contrary, if you have funds that you think will benefit from a trade appreciation over an extended period, you may want to go with position trading.
Just ensure your personality matches the style of trading you indulge. Mismatching this will only lead to losses and stress.
Broker & Trading Platform
Picking a reputable broker is imperative, and taking the time to research the differences between the top brokers can be really helpful. You need to know about each broker’s policies as well as how they make a market.
For instance, trading in the spot market or OTC market varies from participating in an exchange-driven market.
Ideally, ensure the broker’s platform is suitable for the analysis you wish to do. For instance, if you like using Fibonacci numbers or Bollinger bands in your trading strategy, ensure the platform supports this.
An ideal broker with a lacking platform or an excellent platform with a bad broker can be detrimental.
Look at Your Trading Risk Profile
Before you make any major commitment, ensure you get a good comprehension of the fundamental elements of the forex market. Assess your funds, read trader testimonials, and research the currency pairs and markets so that you have a realistic expectation of returns.
If you are not comfortable with the dynamics, do not take the risk, even if it is lucrative. On the other hand, if you think your approach is in line with the foreign exchange market, then it’s a go.
However, you’ll want to keep the following in mind:
– Only invest in what you can afford to lose.
– Diversify the investment. Do not invest more than 20 percent of your funds in one market.
– Be ready to lose. If you are willing to keep going after a series of bad trades, then you can make a living from forex trading.
Stay Abreast With The Markets
How do you actually become a successful trader and make a living from forex exchange trading? Learning the ins and outs of the trade is essential, but staying abreast of market news is just as important.
Most market movements are driven by political events, central bank announcements, hype, news, and the expectation of any of these. This is what is known as fundamental trading.
You might be a technical trader (someone who trades based on chart analysis of a currency pair or commodity). However, it is still imperative to pay attention to fundamentals as they are a key factor in movements in the market.
For instance, if you have a solid trading strategy, and various technical indicators that show a long trade, you should check the foreign exchange calendar to ensure your position matches the current events. Even if you have a robust technical trading strategy, the fundamental news can have a substantial impact.
Make a Living Trading Foreign Exchange – Is it possible?
So, is it possible to make a living trading foreign exchange? Absolutely!
The best thing about trading forex is that you can do it at any time you wish at the comfort of your home or when on the move. Also, nowadays, you need as little as $100 to get into the market and start making money.
However, you need to understand that this comes with a huge risk of losing money, and taking a smart approach is a must.