How to Make Money Trading Forex
Today’s article is about something we all want to do that is; Make a lot of money and make it fast!
I don’t know anybody that did not choose Forex trading for the fact that the amount of money to be made is pretty much limitless.
The funny this is that whilst nearly all are drawn to Forex trading to make money fast, it is only those that have commitment to their education and spending time in the market that will reap any benefits.
Whilst everyone initially wants to make millions overnight, some traders snap out of it and understand that hard work is required. It is these people that will most likely go onto become profitable traders. On the other hand, the other traders who continue to want to make millions without any hard work will stay on the search for the “Holy Grail” that will make millions at the click of a button.
Three ways to Make Mega Bucks
There are three main ways a Forex trader can make mega bucks through trading. These are;
1: Turn little into a lot quickly
2: Turn a big account into even bigger one
3: Commit to education and build account overtime with the power of compound interest
Turning a little Into a Lot
I receive a lot of emails from people who have managed to do number one, and make a lot from a little. I get worried when I hear things in emails I have received such as “I have made 60% in the last week on my account” or something similar.
There are only two ways someone has reached this sort of percentage gain in such as short period of time and it is they either risked far too much or they traded far too much. Either way if they continue what they are doing they will end up having a few losses which will massively dent their account.
Problem with turning a little into a lot quickly is to do this; you have to risk a lot. Whilst this can occasionally work out, you are also running the risk of blowing your account quickly.
The other thing that normally happens is people become addicted to risking large portions of their account and even if they do get lucky and make a chunk of cash, it is only ever a few trades away from being lost.
This is the method that is most commonly used by new traders. As discussed above this is completely normal because Forex attracts people because of the money factor. Until a trader snaps out of this type of thinking they will be held back in their journey to becoming a profitable trader. The trader with this mindset does not want to put in the hard work or the hours. Like anything worthwhile in life, if you want to get anything out; you have to put a lot in. Forex trading is exactly the same.
Turn a Big Account Into an Even Bigger One
I am not going to spend too much time on this method because it is out of the reach for most traders. Most traders don’t have the luxury of a large bank roll to play with. This is the easiest method to make a lot of money because the more money you have the less you have to trade to make good money. For example, a trader who has a $1,000 can triple their account and still only profit $2,000, where as the trader with a $100,000 can make only 2% to achieve the same result.
Build Account Overtime With the Power of Compound Interest
This method offers traders the most chance of being successful. This method does not require a trader to break any new trading records with the return they make. All that is needed is a profitable trading strategy and for the trader to continue to build the account with compound interest over time. In previous articles I have spoken about the power of compound interest for Forex traders. To read this article see here: Make Money Forex Trading
When a trader sets their mind to making this work they can achieve great results. This is the way that small accounts can be turned into very large ones. Most traders are in a rush to make money, but if I asked you that if in five years time you had a large trading account balance, would you take it? Of course you would.
What could you achieve in five years?
Now to some people this would be too long to wait, but the questions is; if you could retire from your job in five years with a large Forex trading account would you take it? Most people work in a day job for 40+ years. Five years does not seem much in the scheme of things when you think of it this way.
The danger for the trader who continues to think like this is they will still be stuck in the same position in five years time! People overestimate what they can do in one year, but underestimate what they can do in five!
Obviously turning a small account into a big one is not just going to magically happen, but with the correct mindset and application it becomes a whole lot easier.
Commit to Your Dreams and Go Get Them!
Is your dream to trade Forex for a living? Do you want the ability to have how much money you can earn capped only by your skill. Do you want to spend more time doing the things you wish to do and with your family? If so then commit to your dreams and start looking forward. Let go of the get rich quick mentality and think what could be achieved in five years.
A common problem I hear is something similar to “I don’t have much money to start with”. If it is really your dream to trade full-time you won’t let anything get in your way. Get a second job to fund your account. Cut something out such as your morning coffee and put that money to your account. Do not let excuses rule your life. There is always a way and you have to want it bad.
The last factor I want to leave you with is that you can save all the money in the world, but if you are losing it in the market whilst trading, you are better of holding onto your money. How can you stop this happening? Easily!
Don’t ever risk a cent of real money until you have proven to yourself that you are a profitable trader on a demo account. If you can’t make money on a demo account, you can’t make money on a live account.
So many people lose money in the Forex market when they have not been a proven profitable trader. To jump this step and go to a live account when you don’t know if you are a profitable trader or not is called gambling. Don’t fall into this trap of short term thinking and that you “have to trade on a live account now”. Stick to the plan and build your account consistently over time.