The million-dollar questions (literally!) – How to make money in Forex fast? Can forex trading make you rich? Yes and No.
Many people think that making money in Forex is easy. All you have to do is when the price is low, buy; when the price is high, sell. But the truth is only in this way you can’t make money in Forex. Many forex traders quickly enter the market, but then quickly exit after experiencing losses and setbacks.
No one will ever tell their exact strategies for making money in forex trading. In this article, we’ll discuss how to avoid losing money and stay in the game in the competitive world of forex trading.
Learning Basic Forex Principles
If you’re an absolute newbie, then you don’t know what forex even is. Do your homework before starting Forex trading. Just because forex is easy to get into doesn’t mean you can start without any trading knowledge. Start gathering your knowledge on Forex trading. In the meanwhile, make your trading plan so that you can be ready to trade Forex with proper strategies.
Using a Broker’s Leverage
Leverage is one of the most important characteristics of Forex. With leverage, traders make use of borrowed funds to open orders that are much greater than their capital. While leverage is not exactly a way to make money in Forex, it can help you to boost your profits.
Most brokers offer leverage ranging from 1:2 to more than 1:1,000, depending on the requirements and initial investment of their clients. In most cases, traders would be able to choose between 1:50, 1:100, 1:200, etc. leverage rate when trading currency pairs. Different leverage levels would be suitable for traders with different knowledge and experience. When deciding how much to borrow from their broker, traders also need to consider their individual needs and the strategy they plan to apply.
Trading Forex CFDs
By trading forex CFDs, you’ll make a profit in pretty much the same way with the difference being that you trade CFDs with a margin. The positions you can take when trading CFDs where the underlying asset is a currency pair is the same as directly trading the currency pair. Accordingly, you will take a long position (buy) if you anticipate a price rise, or you will enter a short position (sell) if you expect a decrease in the value of the currency pair.
Having the Right Mindset
How much time do you need to make money in Forex? Before answering that question, you need to have the right mindset. No business is immediately profitable, especially if they are still learning.
Persistence is key. Some traders only really start to make money after three to five years. Be honest with yourself about the amount of time you can devote to learning. After learning to trade, finally, you can start practicing. Be mindful that not only might you sometimes lose money, you sometimes might not be able to find an appropriate opportunity to trade at all.
Start Small When You Start Real Trading
Once a trader has done their homework, spent time with a demo account, and has a trading plan, it’s time to start real trading. When you start trading, you should ideally be risking only 1% of your account per trade. By starting small, a trader can evaluate their trading plan and emotions, and gain more experience in executing precise orders—without risking the entire trading account in the process.
Making the Right Strategy
Strategy, strategy, strategy. Strategies are how you make your money. Without a strategy, you can’t really say you are even trading. You’re probably gambling with money. Strategies are also much more effective at making big gains. Without a strategy, you cannot expect to make large gains at all. It gives you the power to mitigate your losses.
You’re not going to become a millionaire overnight. Unfortunately, that’s something all forex traders need to accept. Don’t forget that forex trading comes with risk, meaning that you should prepare yourself before you start trading.
ENHANCE YOUR FOREX TRADING
- If you’re new to forex trading, download our Forex for Beginners Trading guide.
- Learn to do your own TRADING ANALYSIS in a short period of time. Check out The Complete Guide To Forex Trading.
- If you want to get FREE Forex signals and make a profit consistently, join our free channel on Telegram here