Is forex trading a way to make a living?

Growing geopolitical uncertainty continues to affect global markets, notably due to the Russian invasion of Ukraine and the resurgence of COVID-19 in China. Due to the conflict and the heavy sanctions against Russia, the financial markets have been shaken since the end of February.

As a result, many markets have seen extreme volatility, especially in the currency markets, as traders take advantage of this volatility.

Salary.com shows that the average salary for a forex trader in the world’s largest economy was around $100,913 as of February 25, 2022, with the range usually between $62,882 and $138,590.

Currency trading is considered one of the most lucrative jobs. Around 5% of forex traders worldwide are bank employees, with the remaining 95% being retail forex traders. Even so, these few banking traders control 92% of all forex volume in the world.

A number of these markets are easily accessible and there are always open trading hours somewhere. You can still trade even if you work full time or have kids at home. Finding the right market and opportunity is key.

Although trading may seem easy, it can be incredibly difficult. While almost anyone can enter the market, only a few succeed.

According to public data, 73% to 95% of forex broker clients lose money. Every trader loses money, but there are always many who are not profitable.

It is important to find a reputable and preferably regulated broker and open an account with them in order to start buying and selling foreign currencies on your own.

Risk management

Forex trading or any other type of trading for that matter has one key rule: never risk more money than you can afford to lose. Beginners especially tend to avoid following this rule because they believe in it. “it won’t happen to them”.

First, you run the risk of losing all your trading capital; and second, trading with funds you live on will add additional pressure and emotional stress to your trading, which can compromise your decision-making abilities and increase the chances of making mistakes.

For this reason, it is wise to trade “prudent amounts” of your disposable income. You should not trade if you cannot afford to lose your money.

Commercial strategy

Once you have chosen your strategy, the next step is crucial. Transactions should be made according to the money you have and the interest you have. After that, you need to develop a trading strategy, which is a business plan, since you are now in trading. The comparison of the services of several Internet brokers should follow. Seek help from a mentor. You are now ready to trade.

In order to withstand the inherent volatility of the currency market, deal with uncertainty, and limit their market exposure when holding open positions, successful forex traders use risk management techniques.

Leverage

Due to its ability to invest on margin, currency trading is generally considered a high-risk investment. The level of risk is very high.

You can benefit from leverage, which is when you receive a small loan from your broker to invest in the forex market. Compared to traditional banks and stockbrokers, forex offers margins that are an order of magnitude higher.

The consequence is that the impact of small exchange rate variations is amplified. This allows you to earn a lot of money. However, you can also lose a lot of money.

Just because a lot of people are attracted to forex because of the margin doesn’t mean you have to invest very risky.

The highest leverage is not necessary. Large trades are not necessary. They are only offered as possibilities, but it is up to you to decide how much risk you are willing to take.

At the end of the line

Despite its lucrative nature, the temptation to take unnecessary risks is strong among many forex traders. More often than not, this is what keeps them from becoming consistently profitable traders.

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