Forex has become increasingly popular among asset traders due to its widespread availability and advantages over other markets. Many newbies look into becoming a full-time forex trader to have financial freedom and wonder if they can do forex for a living.
You can do forex for a living and turn it into a full-time job. However, it’s not wise and doable to make it a sole source of income from the beginning. You need to spend some time gaining knowledge and experience, growing your account, and increasing your capital investment to earn more profits.
Keep reading to see how you can turn forex into a viable income source. We’ll elaborate on how much capital you need and how much you can earn by trading forex.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
Table of Contents
Can You Make a Living Doing Forex?
The short answer to this question is a definite yes. But like any other trading, you can’t just delve into the forex market without weighing down your options, researching, and gaining knowledge.
Forex is a risky business that comes with many predictable and unpredictable hazards. So, you need a robust plan to minimize them.
Your achievements in forex depend on your patience, capital, strategies, and the time you spend perfecting your trading skills. Having realistic expectations helps you tolerate the uncertainty and inevitable losses, especially at the early stages. I can’t stress enough the importance of learning through education, trial and error, and losing money.
Unlike what you may think, forex isn’t a get-rich-quick scheme to exit your 9-5 job in your 20s. It takes you a long time to provide a sustainable income. Therefore, it’s a bad idea to treat it like a full-time job from scratch. The wisest approach is to keep your current job and continue trading as a side job. Once you reach a certain point where you have a viable income, quit your day job and become a full-time forex trader.
How Much Capital Do You Need To Trade in Forex?
Your forex income depends on the capital you put into the business. If you want to make a living off forex, first evaluate your monthly living costs. For example, if you have to make $2000 a month, you need at least $200,000 of capital investment.
Some experts have even higher numbers depending on your risk/reward ratio and trading plans. But if you take things slowly, play with different strategies and tweak them as you go on, you may be able to hit your target with less capital.
You can’t withdraw more than 3 percent of your capital to spend. So, you may not be able to live off forex as soon as you start trading. Of course, the more money you put into trading, the more profit you can make.
However, you can start forex trading with as little as $100. This way, you can begin investing low, learn the trading nuances, definitely lose some money, and gradually get the hang of it. You could reinvest your profits to build your account until you can earn a full-time income.
Another critical factor is the amount of money you risk in each trade. Most forex experts don’t recommend risking more than 1% of your capital, especially at the outset. This way, even if you lose, say, eight trades, you won’t give up much of your capital. Plus, you can make up for your losses more easily.
Two significant parts of any trading strategy are the risk-reward ratio and the win rates. The latter refers to the number of times you win vs. the number of trades you lose. While it’s not possible to have a 100-percent win rate, you should try to win a fixed number of transactions over a long time. A winning trade of 50% is enough for making a living out of forex.
How Much Can You Earn by Trading Forex?
There’s no easy way to answer that question. How much you can earn in forex depends on numerous factors such as your trading strategies, risk tolerance, expertise and experience, and even how much time you spend trading.
Besides, many external forces cause movements in this highly volatile market. Political developments, economic changes, your account size, the currency pairs you choose, and your trading style, among others.
There are always streaks of loss, good months, and bad months. You may even make 30% to 40% profits in some months, but they’re not sustainable and might be due to over-trading or using too much leverage.
Don’t try to beat the market by insisting on a failing strategy. Keep your risks low and try to multiply your gains by following a proven plan.
The best thing is to target 5% to 10% profits, which can be quite good if your account is big. However, as I mentioned earlier, forex trading is more about patience, consistency, and discipline. So, if you see it as a long-term investment, you’ll focus more on the gradual progress than making it big overnight.
How To Make Forex a Full-Time Job?
Earning your whole income from forex requires significant commitment. Treating it like a hobby or a part-time job can’t provide a sustainable income source.
Always watch for the market trends, news releases, and political and financial developments. Take it as your only business, and keep track of everything, including expenses, losses, risks, taxes, gains, etc.
Besides, try to develop a trader personality type so you can survive in the environment.
How To Become a Successful Forex Trader?
If you’re ready to start your forex trading business, you should decide if you have what it takes to be a successful trader. If you don’t, investing in yourself and developing a character is a must.
- Control your emotions. When trading forex, the last thing you want is to give in to your fears or greed and enter a wrong trade. Of course, deciding at times of high uncertainty is difficult, but being an impulsive decision-maker also doesn’t make you a profitable trader. To make the right call, stick to your overall trading plan. If you feel overwhelmed, take a break. And when you make a decision, accept its consequences.
- Avoid overtrading. The best thing to do is to wait for the right chance to come up. You may make a profit by opening several trades, but you can’t do it for long.
- Be disciplined. You can achieve discipline by having a robust action plan. It gives you self-control and keeps you from taking unnecessary risks, thinking about every step before executing.
- Never give up. It’s easy to give up with the first loss, blaming everything on the market and calling forex a scam. But if you take things slow, protect your portfolio from significant losses, and learn from your mistakes, you can turn into a successful trader in the long run.
- Be organized. Keep a journal and record everything, from the details of every trade to your goals and ambitions. This way, you make yourself accountable and detect your weak points and strengths more easily.
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
- Best Trading Courses You Can Take For Free (or at extremely low cost): I reviewed 30+ trading courses to recommend you the best resource, and found Trading Strategies in Emerging Markets Specialization on Coursera to beat every other course on the market. Plus, if you complete this course within 7 days, it will cost you nothing and will be absolutely free! Click Here To Sign Up Today! (If you don’t find this course valuable, you can cancel anytime within the 7 days trial period and pay nothing.)
- Best Passive Investment Platform For Exponential (Potentially) Returns: By enabling passive investments into a Bitcoin ETF, Acorns gives you the best opportunity to make exponential returns on your passive investments. Plus, Acorns is currently offering a $15 bonus for simply singing up to their platform – so that is one opportunity you don’t want to miss! (assuming you are interested in this platform). Click Here To Get $15 Bonus By Signing Up For Acorns Today! (It will take you less than 5 mins to sign up, and it is totally worth it.)
Conclusion
Forex trading can be a viable income source if you develop the skills and strategies required. However, you shouldn’t expect to become a full-time trader as soon as you enter the market. First, you need to invest in learning all the nuances of forex trading and develop a well-designed strategy.
Plus, you should work on your self-development to make sure you can tolerate the stress and risks that come with forex trading. This way, you can turn trading into a full-time business that helps you grow slowly.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
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