Can you get rich from forex trading?
Can you get rich from forex trading?
Every now and then we hear stories of some forex traders claiming to make a fortune in a short period of time, and how currency trading has ensured them a luxurious life. However, you will notice that most of these online stories end with a link to open an account with a forex broker, or even buy a trading system that claims to have superpowers. Although common sense is not to pay attention to such marketing ploys, the details of these stories will inevitably make us think about the truth of the matter. The question that will arise in one's mind after reading these advertisements is whether forex trading alone can get them to the ranks of the wealthy. In this article, we will attempt to arrive at a clear answer to this important question, while presenting the arguments that support our argument.
how to get rich
Before we decide whether a forex trader can truly become wealthy by investing in the currency market, we first need to define what it means to get rich. There is great variation in the definition of a rich person, for example, a person who earns the equivalent of $ 50,000 in a third world country can guarantee himself to live in a comfortable material and social level. On the contrary, this amount will not be enough in the United States or Western European countries to rise to the ranks of the rich, as this person will be classified at best in the middle-income class. The criteria for ranking the rich have also changed over the past few years, as a person needed only $1 million in their bank account to hold this title. But, due to the effect of inflation, sitting among the rich requires providing a cash surplus that exceeds this figure.
According to a survey conducted by the brokerage Charles Schwab, a wealthy person in the United States should own more than $2.40 million. This number may vary slightly depending on the country in which the forex trader resides. But in any case, in this article we will use this figure, i.e. $2.40 million, as a minimum to classify a trader in the wealthy category.
wealth generation
No discussion of forex is without the idea of getting rich. In general, working in the field of financial trading is the preferred choice for many who want to build their own wealth by taking on some of the risks associated with working in this field. The same goes for currency traders, as the forex market offers unparalleled opportunities to get rich, at least in theory. Even in practice, there are no major restrictions on the capital requirements, trading time or profits that you can make. In addition, the leverage offered by forex brokers, although it is a double-edged sword, is not available to the same extent in other financial markets. These facts encourage novice traders to buy into the idea of getting rich quick. Unlike the traditional world of business and investment, making profits from forex trading does not require spending a large amount of time. This is precisely one of the main reasons why the idea of building wealth is so popular as soon as any discussion of forex comes up.
Get rich from forex trading
Of course, you can get rich by trading currencies. But this dream cannot come true overnight. It can take an individual trader many years to grow their small account by accumulating profits. There is also a possibility that you will lose all your money. This leads us to ask about the ideal capital with which to start your forex trading business. Some forex brokers allow opening an account with one dollar. But it is practically impossible to make any real income with this paltry amount. This is based on the fact that all traders, even seasoned ones, can face a series of losses in a row which exposes them to the evaporation of their account within a short period of time. As a general rule, a trader's loss on any trade should not exceed 2% of the capital.
how to get rich
Before we decide whether a forex trader can truly become wealthy by investing in the currency market, we first need to define what it means to get rich. There is great variation in the definition of a rich person, for example, a person who earns the equivalent of $ 50,000 in a third world country can guarantee himself to live in a comfortable material and social level. On the contrary, this amount will not be enough in the United States or Western European countries to rise to the ranks of the rich, as this person will be classified at best in the middle-income class. The criteria for ranking the rich have also changed over the past few years, as a person needed only $1 million in their bank account to hold this title. But, due to the effect of inflation, sitting among the rich requires providing a cash surplus that exceeds this figure.
According to a survey conducted by the brokerage Charles Schwab, a wealthy person in the United States should own more than $2.40 million. This number may vary slightly depending on the country in which the forex trader resides. But in any case, in this article we will use this figure, i.e. $2.40 million, as a minimum to classify a trader in the wealthy category.
wealth generation
No discussion of forex is without the idea of getting rich. In general, working in the field of financial trading is the preferred choice for many who want to build their own wealth by taking on some of the risks associated with working in this field. The same goes for currency traders, as the forex market offers unparalleled opportunities to get rich, at least in theory. Even in practice, there are no major restrictions on the capital requirements, trading time or profits that you can make. In addition, the leverage offered by forex brokers, although it is a double-edged sword, is not available to the same extent in other financial markets. These facts encourage novice traders to buy into the idea of getting rich quick. Unlike the traditional world of business and investment, making profits from forex trading does not require spending a large amount of time. This is precisely one of the main reasons why the idea of building wealth is so popular as soon as any discussion of forex comes up.
Get rich from forex trading
Of course, you can get rich by trading currencies. But this dream cannot come true overnight. It can take an individual trader many years to grow their small account by accumulating profits. There is also a possibility that you will lose all your money. This leads us to ask about the ideal capital with which to start your forex trading business. Some forex brokers allow opening an account with one dollar. But it is practically impossible to make any real income with this paltry amount. This is based on the fact that all traders, even seasoned ones, can face a series of losses in a row which exposes them to the evaporation of their account within a short period of time. As a general rule, a trader's loss on any trade should not exceed 2% of the capital.
According to this rule, someone trading 0.01 lots with 1:100 leverage and placing a stop loss order 50 pips away from the entry point will need an initial capital of about $350. Working according to these limits, but with a capital less than the mentioned amount, will necessarily lead to hitting the stop levels due to the diminishing of the margin. On the contrary, the risk of evaporating the balance of the trader decreases in parallel with the increase in the capital with which he starts work, but provided that he follows prudent risk management rules and chooses the appropriate volume of trades.
Although saving $350 may be enough to start trading forex, turning that small amount into millions of dollars will be a task next to impossible. In other words, increasing the initial capital will allow the trader to reduce the time and effort required to achieve his goal of becoming a 'wealthy person'. The explanation for this is that having adequately sized capital means being able to easily multiply trading volumes, which opens the door to reaching the required balance in a short time after succeeding in a few big trades. As long as the trader takes a conservative approach in choosing the size of contracts, it will be easy for him to increase the account balance quickly, but provided that he has a large amount to start investing.
Based on the above, we can easily imagine that someone who starts their forex trading journey with a capital of $2 million will be a few steps away from achieving the dream of getting rich. On the contrary, starting trading with $10,000 will take many years of profitable trading to get close to joining the rich community. It is no different even if you start with $100,000 (which is the minimum to trade in the forex markets before 2000) because the trader will also need to put in a lot of time and effort to be able to turn that amount into profits in the millions. All of the above can be summarized by saying that the initial capital allocated by a currency trader plays a major role in his chances of becoming a rich person, but of course it cannot be asserted that this is the only criterion for achieving wealth.
Success in trading requires one to have sufficient knowledge of the fundamentals of technical and fundamental analysis. The trader should also follow up on the latest news, reports, political events and developments in the financial markets. The importance of the virtues of patience and discipline also cannot be overlooked.
It should also be remembered that the currency markets can experience sharp fluctuations at any time due to unexpected events. For example, a sudden central bank announcement of interest rate hike or cut, weak jobs or GDP growth data, terrorist or war events, UN sanctions, riots, etc. can That leads to unexpected reversals in the prevailing trends, which can often lead to huge losses or even zeroing of the account. In other words, the chances of the trader losing all his money are still there, which is why those who are experienced in this field advise their counterparts to limit the investment in forex to the money that is surplus to the trader's need.
Conclusion
Numerous statistics indicate that only a small percentage of traders are able to achieve success in their first year in the forex market. This is mostly due to the lack of self-discipline and lack of commitment to using a previously tested strategy in most cases. Also, don't forget that reckless leverage is one of the main reasons inexperienced traders fail. Thus it can be said that only a forex trader with the ability to correct mistakes, self-discipline and patience, and use leverage wisely can get rich from forex trading within a period of time depending on the amount of their starting capital.
All forex traders without exception dream of getting rich, but only a handful of them manage to make it happen. Not unlike in any other field or profession, discipline and dedication remain indispensable for great success even in the currency markets.
Although saving $350 may be enough to start trading forex, turning that small amount into millions of dollars will be a task next to impossible. In other words, increasing the initial capital will allow the trader to reduce the time and effort required to achieve his goal of becoming a 'wealthy person'. The explanation for this is that having adequately sized capital means being able to easily multiply trading volumes, which opens the door to reaching the required balance in a short time after succeeding in a few big trades. As long as the trader takes a conservative approach in choosing the size of contracts, it will be easy for him to increase the account balance quickly, but provided that he has a large amount to start investing.
Based on the above, we can easily imagine that someone who starts their forex trading journey with a capital of $2 million will be a few steps away from achieving the dream of getting rich. On the contrary, starting trading with $10,000 will take many years of profitable trading to get close to joining the rich community. It is no different even if you start with $100,000 (which is the minimum to trade in the forex markets before 2000) because the trader will also need to put in a lot of time and effort to be able to turn that amount into profits in the millions. All of the above can be summarized by saying that the initial capital allocated by a currency trader plays a major role in his chances of becoming a rich person, but of course it cannot be asserted that this is the only criterion for achieving wealth.
Success in trading requires one to have sufficient knowledge of the fundamentals of technical and fundamental analysis. The trader should also follow up on the latest news, reports, political events and developments in the financial markets. The importance of the virtues of patience and discipline also cannot be overlooked.
It should also be remembered that the currency markets can experience sharp fluctuations at any time due to unexpected events. For example, a sudden central bank announcement of interest rate hike or cut, weak jobs or GDP growth data, terrorist or war events, UN sanctions, riots, etc. can That leads to unexpected reversals in the prevailing trends, which can often lead to huge losses or even zeroing of the account. In other words, the chances of the trader losing all his money are still there, which is why those who are experienced in this field advise their counterparts to limit the investment in forex to the money that is surplus to the trader's need.
Conclusion
Numerous statistics indicate that only a small percentage of traders are able to achieve success in their first year in the forex market. This is mostly due to the lack of self-discipline and lack of commitment to using a previously tested strategy in most cases. Also, don't forget that reckless leverage is one of the main reasons inexperienced traders fail. Thus it can be said that only a forex trader with the ability to correct mistakes, self-discipline and patience, and use leverage wisely can get rich from forex trading within a period of time depending on the amount of their starting capital.
All forex traders without exception dream of getting rich, but only a handful of them manage to make it happen. Not unlike in any other field or profession, discipline and dedication remain indispensable for great success even in the currency markets.