Those new to online trading often approach Forex with this question: How to make money on Forex? You may already know how the stock market works, but the currency market has a slightly different mechanism.
To profit from Forex, you have to swap one currency for another in search of the best exchange rate. But don’t expect Forex to be a sure win or sure source of income.
You are certainly wondering how much a forex trader really earns. Well, it depends on skills, the time devoted to trading, and the forex broker.
Here are some practical tips to start investing in currencies and gradually working on your trading success.
How does a forex trader make money?
Due to continuous events around the world, the value of currencies can suddenly change. All trade in goods and services between countries must necessarily involve the buying and selling of currencies, which makes Forex one of the most popular financial markets.
Not just that. The value of the currency is also influenced by geopolitical events, the central banks, financial crises, and the speculative transactions of millions of traders.
In this context, to make profits, a forex trader must anticipate these changes, with the simultaneous buying of one and selling of other currency.
How much can you earn in forex trading?
The volume of foreign exchange gains is an issue that plagues many novice traders. The correct answer is that there are no limits: potentially those who invest in the currency market can pocket billions of dollars.
Although the gains are theoretically unlimited, investing in the currency market can also lead to big losses. Forex, like the stock market, is characterized by high price volatility, which can generate profit opportunities but also expose invested capital to risks.
The vast majority of forex trading accounts turn out negative in the first few months of activity. The reason? A novice trader does not have the right experience to trade easily in the currency market with CFDs.
An investor can be considered an expert with a monthly gain of 3 to 5%. It means an increase of around 40 to 60% over the year.
Make money with Forex trading: Practical Tips
There is no real secret recipe for success on Forex. Everyone has their own strategy, goals in a market full of surprises and unexpected events.
However, there are some rules for the very beginners to gradually enter the forex market and try to profit.
Start from the forex demo account
In the beginning, making a profit with Forex first means minimizing losses, especially if you’ve just approached the world of online investing. Starting with a demo account is a mandatory thing for every newbie. A forex demo account is the best choice to practice without burning your savings. Choose one of the forex brokers that offer demo accounts, register for free, and use virtual funds for simulation of trades.
Study and practice
By trading on a demo, you cannot expect to learn automatically. Of course, demo accounts help a lot, but they are much more effective when combined with good financial education. For example, have you ever thought about taking a beginner’s forex trading course? You will quickly learn how the currency market works, how much and how to earn with Forex, but also how to set up your own investment strategy, and more.
Know the most traded currency pairs
Ready to earn as a forex trader? Good advice is to start with the most traded currency pairs: these are those from the most stable countries, with low inflation and with less risk of sudden devaluations. Try to start, for example, by swapping the EUR / USD exchange rate. Keep an eye on the chart in real-time, follow the market trend and news, use technical tools, and your knowledge of technical analysis.
Beware of anyone telling you Forex is easy money and it should be your only source of income. The truth is that it takes patience and study to get results. And you certainly shouldn’t rely only on Forex when it comes to making money for a living. However, it can be a great side hustle, and if you are really talented and you know to read the market trends and react accordingly, it can bring you a lot more than just pocket money.