Forex trading is all about profiting from the movement in the prices of currencies. These prices of currencies are never static – they are always moving. This theoretically means that forest trading offers a continuous potential for making money.
However, it appears that this potential is deceiving because there is a greater likelihood of losing money than making it. Depending on who you ask, between 75 and 85 per cent of traders lose their money.
This raises the question of whether forex trading is worthwhile, and whether one can build wealth through it.
Wealth Building Through Forex
Wealth is anything that gives you money. It is not money in itself, but it provides a steady inflow of money. So is this possible with forex? Well, yes and no.
As stated above; around 85% of traders lose money trading forex. That means there is a bigger likelihood of losing whatever wealth you already have, instead of making any money.
However, about 15% of traders are profitable in the long term.
So yes, if you can somehow find a way to be among the 15% of traders who are profitable then there is no reason why you cannot make wealth.
How To Be Among The 15%
Practice. Except one is a genius, the only way to attain this kind of proficiency is through plenty of practice. There is no particular time frame in which a trader must practice, but a few years seems quite normal.
Let’s say 2 years to become a novice, and 5 years to become a good trader. However, it is good to remember that good traders also lose money. Some say that a person needs 10 years to master the art of trading. This is because practice is not all that is needed.
Read. Reading books, articles and other instructional materials can help one understand more about the intricacies of the business. For example; a widening channel usually results in a price drop. Practice alone may not give one that idea. It is easy to miss that particular little detail.
Reading and consuming instructional materials will help you know what you are looking at. This will help you make consistent profits, and help keep your mind at ease when you witness the markets pulling its occasional stunt.
We could say reading helps remove the pain but that is not exactly true.
Pass through the pain. It is necessary to master emotions; they are one of the major reasons why people lose money in this business. Emotions here mean fear and greed – both of which cannot really be experienced with a demo account.
You need to invest real money into forex and lose that money to truly understand what the business is all about. It’s like a child. You can tell him not to play with fire (reading) but it is when he gets his fingers burned that he really understands why he should not play with fire.
That pain will teach you why you need to tread cautiously; why you need to keep your greed in check, and why it pays to fight fear.
Develop a strategy. Most of the elite traders have strategies they use, and which they will never tell you. The strategy comes through pain – years of losing to the brokers give you insights as to why people lose their money in the markets. When you lose enough you start to understand how the markets move, and you get an idea of how to avoid the pitfalls.
When you develop a strategy, you get to understand why traders never reveal their strategies. It is the only thing that brings in the greens. You have to protect it with your life.
Build Wealth Outside of Trading
As soon as you have become consistently profitable, you find that there are several other avenues to make money through this business. You can write eBooks, start selling courses, or subscription videos.
You also start selling signals on social media or start trading for other people. It is all about expanding your horizon; making wealth by helping other people to make wealth.
Of course, this is not exactly outside trading, but it is outside your daily sitting down in front of a screen for many hours. It is outside your own capital, and may even allow you to make money while you sleep.
But it has to be done slowly; none of these can be rushed. First things have to be put first; you need to learn how to trade. Even when you have learned how to trade, you must not be in a rush to start building wealth outside trading. This is because it will take a lot of showing your trading results, and this will bring a lot of distraction, and a lot of pressure, which you may not be ready for.
This extra pressure can easily lead to your ruin; it can cause you to make a lot of mistakes in your trading. One or two mistakes may be okay, but too many will lead to ruin without any doubt.
Therefore, put the horse in front of the cart – make sure you focus on your trading. Become good at it to the point of seeing a chart and spotting the opportunities within seconds. Then and only then can you add anything extra to your trading.
Find A Good Broker
A good broker is essential to success in this business. There are probably hundreds of brokers out there, but it will do you good to know that many of them are thieves. You need to know how to spot the good ones. You also need to know fake reviews when you see them; they are central to how fake brokers operate.
This business is hard enough, but it becomes even harder with brokers who manipulate the charts or stop you from trading when a good set-up arises.
A good broker plus a good strategy can go a long way to ensure that steady money comes in. This is the goal of every trader, and yours should not be any different.
The Bottom Line:
Forex can be a source of wealth, but that wealth cannot come in a day. It will take a long time to master the art of trading and to develop a winning strategy. When that is done, then you can go ahead to build a business around it.
Further Reading:
Can You Really Trade Forex With $20?
