The idea of trading for a living is appealing for a number of reasons. Not only do you get to be a part of a consistently changing, 24-hour industry, but you also get to be your own boss, work on your own schedule, and the potential earnings are almost unlimited. However, if it was that easy, everyone would be doing it. Here’s what you need to know to have the best chances of making your dream a reality.
One of the first hurdles you’ll face trying to make a living from forex trading is establishing the capital early on. The amount of money you can expect to earn is directly linked to the amount of money you can risk. If you’re underfunded, it will be very difficult for you to simply afford to make enough transactions for it to be worthwhile. While there’s no specific amount of disposable income you’ll need to get started, if you were to make 10 round trip trades per day in a 21-day month you could end up spending over $1,000 on commission fees alone.
Understanding the Market
While the currency fluctuation in the forex market is usually very small, that doesn’t mean that it can’t be quite volatile. While high volatility is often seen as a negative, it’s important to remember that movement is an essential part of any market. The possibility to make profit in these kinds of scenarios is often a major boost to day traders looking to move quickly, rather than long term investors looking to buy and hold. Any large market swings could result in huge potential gains, though you can also make equally large losses which is why traders will need to take the right precautions to effectively manage the risks.
Picking Your Strategy
Most Forex traders working professionally focus their energy on the daily market. This is because the weekly or monthly charts do not provide enough trading opportunities for it to be practical. The forex market is typically a 24/5 market. This means that it’s open from 9pm GMT on Sunday night to 9pm GMT on Friday night. However, you do have a full 24-hour trading day starting at 9pm GMT and ending at 9pm GMT the following day which means that, despite the market moving slowly, there is the possibility to earn substantial profits when working on a large scale.
Think you have what it takes. Before you commit to the real thing, you should get all the experience you can get.