One of the most common questions that I received about forex trading is if forex trading is profitable. The only possible answer to thios question is yes; forex trading can be profitable. It is how I and countless others make their living. But this is not the entire story. You are asking the wrong question. The right question to ask is not if forex trading can be profitable. The right question is whether or not forex trading would be profitable for you. There are plenty of people who make a living on the forex market, but there are many more who end up losing money when they try forex trading. You have to be honest with yourself and contemplate if you have what it takes to become successfull. In this article, I am going to help you answer the question of whether you are likely to earn or lose money if you start trading on the forex market. But before I answer that question, I am going to answer another one of the most common forex questions:
What is forex trading?
Forex trading is the common name for all trading on the foreign exchange market—a market where currencies are traded. A forex trader is buying and selling different currencies to make a profit. Basically he is exchanging different currencies to be able to make money from the fluctuating value of the currency.
Let us pretend that one USD is worth one GBP. You sell 100 USD and buy 100 GBP, One our later the GBP has gone up in value, and one GBP is now worth 1.01 USD, You now sell the GBP and buy USD: You end up with 101 USD and has made 1 USD profit. A forex trader makes a lot of trades like this attempting earning a small profit on each trade. He might use leverage to be able to earn more from the small fluctuations in value.
The forex market is very liquid, so you never have to worry about not being able to sell your position when you want to.
Now that you understand how forex trading work, we can return to the original question. Would forex trading be profitable to you?
You can read a more indepth article about how forex trading works here.
Are you likely to make a profit?
Most people who attempt forex trading ends up losing money. It is not an easy way to make money, and it is not easy money. To be successful in the forex market, you have to be willing to dedicate a lot of effort to forex trading.
You have to be able to stay informed and study what happens in the market to be able to make money. There are signal services that claim that they will do the research for you and tell you what to buy. They are all scams. Skilled traders are not selling their information for a few hundred dollars a month. It is worth much more. Also, a skilled trader does not need the money or the hassle that is required to run an honest service like this. Their time is too valuable. There are no short cuts. If you want to become successful, you have to do the job yourself.
If you are looking for an easy way to make money, then forex trading will not be profitable for you.
If you are not able to devote many hours each day to the trade, then forex trading will not be profitable for you.
If you do not burn to become a succesfull trader, then forex trading will not be profitable for you.
Most people should avoid forex trading, and most people who try forex trading fail. Do not try forex trading unless you understand this and think that you have to become successful.
What does it take to become successful?
You do not need any special skills to be able to become a successful trader. Allmost anyone can do it if they want it badly enough. You do not have to be good at math to become a trader. There is software that can make most calculations and charting for you. This is not to say that it isnt beneficial to be good at math. It can defenitely increade your chances of success. But it is not required.
The two most important qualities that you need to possess if you want to become a successful forex trader is dedication and discipline. You need to have the dedication required to learn everything you need to learn to become a successful trader, and you need the discipline only to make trades that are likely to net you a profit. You need to be disciplined enough to avoid chasing profits and make to many trades. Your success will be decided not by the number of successful trades you make but rather by the percentage of successful trades you make. Being disciplined enough not to take any unnecessary risk is essential for success.
There is one more thing you need to become a successful trader — a trader that is able to earn a profit from forex trading, TIME. You need to have enough time to devote to forex trading. It needs to be a profession. Not a hobby or a side hustle. You need to be able to devote at least 4 hours a day. More is better. Most succesfull traders devote 8-12 hours a day to trading and studying the market.
Remember that most people lose money when they try forex trading. Avoid forex completely unless you have what it takes to become successful. This will not garantee success. But it will give you a good chance of success.