Forex Basics

Is Forex Trading Profitable? Here’s the Truth…

The study of human neurology shows how reward increases the activity of dopamine neurotransmitters, which explains our cravings when we smell the coffee brewing in the morning or satisfaction upon completing a task. The same reward system has a tremendous impact on how we approach business ventures, which is why we often need to conceptualize the results of our efforts in advance.

The interest in the profitability of trading currencies in line with this human behavior and, while we may not always process this consciously, we can in fact help our motivation to take on new tasks, provided that exercise control and minimize the risks. Today, we are going to assess what the word profitable means in terms of numbers and how we can increase our return from trading currencies.


We all know how high the percentage of losses for the majority of traders, especially in the beginning. The reason for these unfortunate outcomes often lies in the fact that many only learn the basics (i.e. reading the chart, some essential terminology, and tools to predict where the price will go). Beginners hear some compelling success stories which make them believe that they will easily turn their initial investment of 500 USD into millions just by following the tricks they read online. Along with these assumptions, traders immediately expect to be able to quit their day jobs in a matter of a few years, which is why they further encumber their bank accounts with new loans right at the start of their trading careers. 

Unfortunately, once traders set up their systems and start trading real money, they frequently realize that the intermittent and inconsistent wins can hardly make up for the losses they are taking. This typical scenario is further affected by poor money management skills, in which so many beginners fail to invest because they are preoccupied with the idea of amassing a fortune overnight. Even more appalling circumstances involve the traders who, despite seeing how their predictions and moves are not leading to any gains, stay in those trades hoping for a positive turn of events. This deadly combination of factors offers an explanation for the staggeringly high failure rate in this market.

Many people cannot afford to blow out their accounts, and despite each trader’s starting point, we all need to change the perspective to properly measure profitability. To ensure a better start, beginners are advised to bury the hopes of their initial deposits being able to make any changes in terms of their financial stability. The first 500 USD investment simply cannot suffice for the projection many traders make for their future, yet they should still deposit this sum and keep going. It is absolutely crucial for any trader to become comfortable trading real money after having traded with a demo account for a while. Real, professional trading will allow you to learn how to manage your emotions and understand how market conditions will simply not allow you to get 20 pips each day as promised on some blog online.

So, finally, we come to the question of how much money one needs to make through trading currencies to be able to earn a living. First of all, very few people have the luxury of being able to invest the initial 500 USD and, after calculating the yearly return, you can see how you can use the amount of money you made in a year. Even though we all know about the impressive 20% return per year Warren Buffet makes, we need to maintain a realistic perspective and learn how to plan objectively.

Some of the most affluent figures in this market willingly give exorbitant amounts of money to their advisors just to get a 13% yearly return, which is certainly worth the effort in their case. Therefore, with a 100 thousand USD account, one can get a yearly profit of 20 thousand USD before tax with the extraordinary 20% return only a handful of professionals can obtain. This unfortunately does not do much for the vision of living off forex, as it realistically provides just a few thousand USD over the poverty line in the U.S.

Luckily, there is another way for any trader who is ready to commit to learning and offering consistent results year after year. Some experts shared how they had significantly less money than the above-mentioned 100 thousand USD, but managed to get hired by prop firms, hedge funds, and financial institutions to trade on their behalf and with their money. The requirement for this type of business deals is to develop a functioning system and showcase your consistent results. Even if you have only a demo account or a small trading account records, you can still find an individual willing to take a look at your achievement, provided that your results reflect the minimum span of one year.

Be ready to take these companies’ tests and expect to go through a probationary period where you will have to show them how well you can do in real-time. These companies keep a percentage of the profits traders make and they often require traders to set aside some amount of money as a form of protection in advance as well as cover certain fees. Even if you do not have a degree a great trading record can help you, as long as you are honest and straightforward with your numbers and achievements. 

If you have a proven high-functioning system, you can trade your own money and earn additional profit through another company, which enables you to trade professionally with minimum investment. As you can see, the only condition that you truly need to satisfy is to be legitimately good at trading currencies. Some prominent traders explain how, due to the lack of information, they needed a lot of time to accumulate knowledge and skills to be able to display their results to any company. Circumstances are much different now although traders keep making the same mistakes.

Success does not happen overnight, so instead of being hasty about what your future holds, overcome the instant gratification hurdles and compulsions and start slow. Rather keep your risk small in the beginning and learn how to trade steadily in the meantime. The investment you make can be minimal, as you can trade forex professionally regardless of where you get your results. Whether you invested your own money or used a demo account, you need convincing results owing to which you will be able to be noticed by a company willing to take traders to work for them. 

As you can see, the topic of profitability is a loose category and it mainly depends on what your lifestyle and aspirations are. Many countries in the world other than the United States offer entirely different living conditions and, what is more, you may not want to depend on trading currencies alone. Nonetheless, if you are willing to take the time to learn everything there is to know about this market, set up your algorithm, test it thoroughly, open a demo account, and understand your reactions and emotions, you have a great advantage that can open doors to unexpected ventures and outcomes, regardless of your starting point.

As a final piece of advice, the best way to achieve your objectives and see the lucrative side of the forex market is to not give up, withstanding any challenges with a clear goal and a sense of gradual development.


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