How to Become a Successful Full Time Forex Trader
A major problem with many aspiring traders is that they want a large trading account, but are stuck trading a small one. This article is going to cover a few truths and what you can do to make that small account into a big one.
Many traders have the end goal of wanting to trade Forex full time for 100% of their living. Whilst this is a respectable goal to have, it does not have to be everybody’s goal. Some may love their job and just want a little extra income and others may just want their end of year holiday paid for. Whatever your personal goal is the fact is; the bigger the account, the more money you can safely make without over leveraging and over trading.
It is because of this fact that many traders end up risking far too much, or they trade too much. If you are familiar with our site and blog you will know we speak a lot about one of the biggest account killers which is;
A common trading myth or thought is that the more you trade, the more money you will make. The thought pattern goes that to make money we need to trade and more trading will equal more money. Whilst it is true that more trading equals more potential to make money, more trading normally equates to taking less than desirable trades which end in losses.
There would be nothing wrong at all with more trading if all of the trades placed were A+ setups. This is rarely the case, and in most situations more trading leads to entering of more rubbish setups, a bunch of over trading which in turn leads to losses.
So How To Trade Less and Make More?
Whilst trading less may sound the exact opposite of what a trader needs to do, it is quite often why most traders come unstuck. In the Forex markets less actually means more. Stop for a second and think about it. LESS = MORE.
One of the main reasons why less equals more in the Forex markets is because the stricter you are in your trade selection, the higher the chance you have of placing a winning trade. When traders work out different mathematical equations for their trading, they often neglect to think about the losses and how much the losses can hurt their account balance.
The pickier you are in your trade selection the higher your chance of having success in a trade, and more importantly the less chance you have of making a loss. Every time a trader makes a loss it eats away at the profit made from the winning trades. If you can cut down your losses, the less winning you will need to do to make a profit overall. In other words if you can trade less and place better trades, you will need to make less winning trades to make a profit overall, because the amount of losing will be reduced.
How to Build a Large Account and Trade Full Time
A major trick to building a large account is using both time and compounding. At Forex School Online we are not about making riches overnight, but teaching traders to trade and build accounts over time. Forex trading is a business and in all my time trading the markets I am yet to meet someone who has got rich quick and kept it. I have however met plenty of people that make profits consistently and live from profits made in the markets. To get rich quick you need to risk far too much, or trade far too much. Both of these things will kill your account in the end, it is only a matter of time.
Most professions that have large employee salaries will require you to have some sort of study or experience behind you. These jobs such as lawyers and doctors require you to have as a minimum 4 years of study and in a lot of cases much more. After this study you will then be required to work up the ranks working for someone else in most scenarios for many years to come.
In Forex trading there is no limits on how much money you can make. There is no boss and you are free to work your own hours on whichever days you choose.
If you are reading this and have a small account, I want you to start thinking about these other professions and put trading into perspective. If you could take that small account and over the next 4 years build it into an account large enough to trade for a living with, would it be worth it?
Most people wait for 35+ years of working to do what they want in retirement. If you can make that small account a big one in 4 years, you can live your dreams and cut 31 years off working and waiting that is normal in other professions. Would it be worth the 4 year wait?
The point I am trying to get across to you is that whilst most traders fall down trying to make millions overnight, they fail to realise what they could achieve with a little patience over time. I am also trying to stress that to take a small account and build it into something large enough to trade for a living with you do not have to make 1,000% overnight.
What is Needed to Turn a Small Account Into Large Account?
The following example is a hypothetical example of what could be achieved in 4 years if the following results were achieved by a successful trader with consistent profits.
Trader Jane has an account of $10,000. Jane really wants to trade for a living so she can spend time with her family. Jane has set herself 4 years to turn the small account into an account that is big enough that she can quit her job, and live comfortably with profits made from trading the markets. Jane will be using compounding and will not be touching any of the profits made.
Jane is a good trader and on average only makes 4 x A++ trades a month. Jane only makes 4 trades a month because she is very picky and realises that the pickier she is, the better the chance is of making a winning trade. Jane also realises that in the Forex market less is actually more.
Over the following 4 years Jane risks 3% per trade and averages 3 wins and 1 loss for every 4 trades. In this example Jane has a good win rate but only averages 1/1 risk reward per trade, meaning that on each winning trade Jane makes she profits the same amount as the amount that was risked.
For the ease of this example, the following equation has been worked out with Jane having 3 wins in a row followed by 1 loss each month. If Jane risks 3% per trade it means she will make +9% per month. Once we take away the loss for the month which is -3% Jane will have a total of +6% per month. If the power of compounding is used after each month, the percentage made for the year will blow out to 100%.
If Jane can average 6% per month for the next 4 years and does not touch the trading account balance, she will turn that small $10,000 account into $160,000! This is more than enough for most people to trade for a living with.
In this example scenario Jane is not risking a crazy amount. She is not trading every single day; in fact she is only averaging 1 trade a week. What she is doing is using the power of compounding and treating her trading like a business.
Obviously some months Jane may have more losses than normal, and other months have much bigger winners, but the example is worked out as an average using reasonable targets.
Before the start of this article if I told you that by averaging 6% per month you could turn $10,000 into $160,000 in 4 years would you have believed me? Most wouldn’t because most traders are trapped into thinking only about the now and what is happening in the next trade. Traders need to keep the bigger picture in mind for all of their goals. Most traders want their Ferrari now and don’t treat their trading like a business which tends to make them risk too much.
Becoming a successful full time Forex trader is not all smooth sailing.
Stop falling into the traps and mistakes that other traders are falling into. Take a step back to reassess your trading and goals. Are you aiming for goals that make you over trade or risk too much?
I hope this article has opened your eyes to what can be achieved when using the correct mindset and treating trading like a business.
Please leave a comment at the bottom of the page if you enjoyed this article and let me know about any experience you have had with the scenarios discussed in this article. Also make sure you hit the like and share buttons to pass it on to others that may find the information contained helpful.