This is quite a big question, yet it is one that you need to ask yourself before you jump into the world of trading. The forex markets are the biggest marketplace in the world and offer the most liquidity and profit potential anywhere in the world, but with all of that opportunity comes a cost, as there cannot be an opportunity with some form of risk. So if you have ever asked yourself questions like, “Is it worth trading?” or “Should I start trading?” this article will give you some insight into what trading is and whether or not it is worth taking it up as a hobby, or even as a potential future career.
To answer the question of whether or not it is worth being a forex trader is simple, the answer is yes, but it is also no. The answer to this question will depend entirely on who you ask and what their own experiences of trading have been. If you were to ask someone who had pulled in all their savings into trading and then lost, the answer will of course be no, they would advise you to run a mile, however,r if you were to ask a very successful trader for one of the multi-million dollar companies, then they will most likely say yes, simply based on their own experiences. So asking others won’t really give you a clear picture or idea as to whether or not you should be trading.
So we know that you will need to find out first hand whether it is right for you, but you first need to get an understanding of why you are thinking of being a trader in the first place. What is it that has made you think about trading? Are you looking to become rich quickly? Are you looking to make a little extra on the side of your job? Are you looking for a completely new career? Knowing this will give you an idea of what your aims are and whether trading will be able to offer what you want. Are you willing to learn? To spend hours and hours reading, analyzing, and practicing? If yes, then it may be something that you can work with. If you already think you know it all, or simply want to get rich overnight, then there may be a rude awakening when you actually begin to trade, overconfidence is one of the most dangerous emotions when it comes to forex trading.
What does it mean to be a forex trader?
Forex trading is all about buying and selling currencies, you try to buy low and sell high, that is all there is to it. Of course, it is a little more complicated than that. There are tonnes of variations to trading, multiple different account types, lot sizes, dozens of pairs to trade, each with its own influences and influences. With that, here are hundreds of different styles and strategies for trading, some of which you may have heard of, others you may never hear of no matter how much you trade. There’s so much variation and so many options that you should be able to find something that fits you well.
Trading can also be used to help diversify your portfolio, any investor will tell you not to put all of your eggs into a single basket, well trading and forex is an additional basket, and a potentially very good one to be involved in. It does provide the opportunity to change your career or to build a second income, but it won’t be easy.
Does forex make money?
Yes, that is the simple answer, but only if you are doing it properly. For every penny that you can make, you must also risk some, so those that come into it simply wanting to make a lot of money, will risk far too much and most likely lose it all, while those coming in with the expectation of a long term investment, over the period of years, will properly maintain their accounts and their risk and will then be on the right track to be profitable.
The problem is that we cannot actually tell you how much you will make, there are a lot of different factors which would influence this, your starting balance, the risk that you take, the market conditions, your strategy, and more. There are a lot of factors that will influence how profitable you are. If you think about it, make 5% to 10% per month for 10 years, you will be looking at a small fortune, but try to push that to 50% per month as an example, you will probably only last a month before you have lost it all, think long term, not instant profits.
One thing that you need to consider when looking at trading is the comparison to a normal career. With a normal job, you have stability, you know how much you will be bringing in or at least what the minimum amount will be, when it comes to trading there is no guarantee. In fact, you could even lose money in a month, the volatility is there, you can make a lot, and we mean a lot, but you can also not make anything, so if your current financial situation is quite tender, trading full time would not be a sensible option, however, doing on the side of a normal career job is certainly an option, and a good one at that.
Should I become a full-time trader?
Another question a lot of people ask, but they normally ask this one after having traded part-time for quite a while, there are however some exceptions who jump straight in and go full time. If You are thinking of going full time then there are a few considerations that you will need to take. Do you have enough capital to sustain things, if you have a bad month, two months, three months, will you still be able to survive? Are you currently making as much if not more than your actual job with your trading? Do you have the discipline to keep yourself on track when doing it full time? These are just some of the things that you need to consider, if your answer is no to any of them, then you should probably hold off going full time for the moment. You will also need to consider whether you actually enjoy trading, if you do then great, but many people find it boring to sit by the computer looking at graphs for hours on end, so if get easily bored, you may begin to struggle after a while.
What are the risks?
When there is the opportunity to make money, there is also a risk involved. When it comes to trading this risk can be pretty high, people have lost entire accounts on a single trade, others have lost an account over a longer more drawn-out time period of months or even years. This is why it is always stated that risk management is key. Risking 1% per trade as opposed to 10% per trade can save your account, the profits won’t be as high, but again, we are going for long-term profits rather than overnight riches. If you are planning on trading, then you will need to stay disciplined, create a risk management plan and then stick to it, as soon as you deviate, you are putting your account in danger. It is of course also possible to lose even when doing everything right, so you need to go into trading knowing that there is risk involved.
So let’s assume that you have decided that this is something that you want to do, how would you go about starting? The first thing that you want to do is to find somewhere to get a basic forex education, there are plenty of places out there in order to do this. You will then need to start reading and read a lot, there is an endless amount of information out there. You will also want to get yourself a demo account, somewhere where you can practice, if you have not got one yet, get one, it will give you an idea of what you need to do to place trades and a little insight into how the markets move, all valuable things to know. Once you have gained a bit of knowledge, put it to practice within the practice account, then eventually you will be ready to go live as a forex trader.