If you are thinking about trading forex online or have just got started, you have probably thought to yourself can you make a living trading forex? The simple answer is yes. However, it can take many years of studying and practice to become a successful forex trader. You will no doubt make lots of mistakes along the way but this can help you to improve your trading knowledge and skills to become a better trader in the long run. You can also limit the losses by taking a few precautions and listening to those who already have years of experience to help guide you along the way.
Can forex make you a living?
Yes, but it is very difficult. You will need to spend as much time as possible reading about forex trading and practising on a demo trading account. It may take years until you see some progress but some traders just have the natural ability to be able to interpret the forex market and pick good trades. Others will need as much trading tools as possible in order to make informed trading decisions.
I think it is important that you manage your expectation when you start trading forex. I see many beginners who think they can make a million in no time. However, it does not work like that. There may be a few traders who get lucky, but the majority of retail forex traders lose money.
So many wannabe traders are looking for a quick fix with forex robots or forex signals, but I don’t think anything can beat educating yourself and learning from your mistakes. This way you can build your experience and become a full-time forex trader without relying on anyone other than yourself.
What is forex demo trading?
Forex demo trading allows you to practice your trading skills without taking any financial risk. You can choose the amount of virtual funds that you would like on your demo account and trade at your own pace without worrying about losing real funds.
I personally would not use real funds until you are consistently seeing good results when demo trading. This can be a great way to practice your forex strategies and implement the knowledge that you have learned. Nothing beats a hands-on approach in my humble opinion.
You can get a free forex demo account from nearly all forex brokers, including IC Markets. They are one of my best forex brokers as they have user-friendly platforms, lots of trading tools, convenient payment options and excellent 24/7 support.
Just keep in mind that forex demo trading does not always take into account human emotions which can have a significant impact on your performance. You might not feel fear, anger and greed on a demo account when compared to trading with real money.
This is why some aspiring forex traders would start on a cent account (micro account) to get a feel for trading in a real environment but with smaller position sizes and thus, less risk.
How much do forex traders make?
This is impossible to quantify and actually not very relevant. Yes, it may sound super impressive if a forex trader is making a million each month, but they may have a huge amount of disposable funds and decades of experience. You may have a trader who “only” makes a few hundred each month but spends countless hours every day analysing charts.
What I am trying to say, is how much money a forex trader makes is going to depend on their initial investment size and experience level. I don’t like to copy or follow what others do, I think every trader is different so you should practice on a demo trading account and see what trading style works for you.
There are forex traders who will use very risky martingale strategies or grid trading because they are prepared to take high risk for potentially high rewards. On the other side of the spectrum, you have traders who are swing trading and holding positions for the long term because they don’t mind conservative returns.
Is forex a good way to make money?
Believe it or not, I would probably say no simply because it can be quite stressful even at the best of times. If things are not going well with your forex trading then you could be losing money and making unnecessary mistakes which leads to yet more losses. When things are going well, you can get greedy and end up not taking your profits or looking for opportunities that just aren’t there.
There is no consistency when trading the forex markets as anything can happen. You could have the best forex trading strategy in the world, but if there is an unexpected “black swan” news event, your account could be wiped out in an instant. I have seen traders have accounts that have taken years to build up taken away in a matter of hours.
On the other hand, if you have a steady day job, at least there is some consistency with your income. Should your boss decide to fire you, there will probably be some severance pay to tie you over until you find other employment. If you are relying on the forex market to pay your bills, there is no certainty you will be able to afford them as nobody can predict the market with 100% accuracy.
How much capital do you need to trade forex for a living?
To start trading forex on a demo account, you don’t need any money but of course you will not make any money. However, the experience that you gain will be vital and it can help stop you from making silly mistakes as a new trader.
If you want to go all out and try to trade forex for a living, you can get started with as little as $1 depending on the forex broker that you choose. Obviously, with such a small investment, it will take a very long time to start seeing any noteworthy returns. Only ever trade forex with an amount that you feel comfortable with, and never risk more than you can afford to lose.
The more disposable income that you have to trade forex with, the greater your profit potential can be. Just keep in mind that also means your losses can be greater. I am not going to lie and say if you deposit $1,000 into your forex account and start scalping the forex market you will be rich in a few months. Chances are if you are using leverage and a new forex trader, you might just break even at best.
Advantages of forex trading
- Many different trading strategies to choose from
- Trade manually, use forex robots and copy forex signals
- Demo accounts are good for practice
- Lots of free resources to learn about forex trading
- Minimum deposit of just $1 at many forex brokers
- Large community of forex traders to share ideas with
- Be your own boss and trade in your own time
Disadvantages of forex trading
- Takes years to master
- Most retail traders fail
- Requires intense discipline
- Lots of forex scam to avoid
- Unexpected events can happen
- No consistent income
Conclusion: can you make money forex trading?
Yes, you can make money trading forex but as I have mentioned throughout this article, it is very tough to do so and requires immense dedication over a very long period of time. I would try to avoid anyone who promises you will make “x” amount over “x” amount of time and guarantees returns. They are usually after your money and do not care about your education.
I personally feel that nothing can beat teaching yourself how to trade forex in a way that works best for you because we are all different. You should have a solid forex trading plan that caters towards your own financial goals.
Learn as much as you can about forex money management and trading discipline. You can have the best forex strategy in the world, but without these aspects taken into consideration, it will be very default to make a living trading forex.
A forex demo account is a great place to start. You will find lots of free forex trading guides and tutorial videos online, including my website. Do not rush things and understand that forex trading is a business just like anything else, not a get rich overnight scheme.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.