Is forex trading profitable? Guess this is one of the questions you’ll be asking if you’re new to the forex system.
Forex trading is one of the ways to benefit from the financial market. And of course, you probably would have heard about people making a lot of money trading forex.
As a result, you would want to know if trading forex is what you can be doing to start making money.
If I’m going to be sincere, there’re some things you should know than a yes or no answer. And to some extent, this article will do justice to that.
I’ve discussed certain things you need to know about forex trading.
Is Forex Trading Profitable?
There’s no doubt that most people that trade forex don’t make any profit. As a result, the question “is forex trading profitable?” usually boils in their minds.
Well, forex trading can be profitable if you understand how it works. After all, the forex market trades trillions of dollars daily. If it’s not profitable, the market won’t be trading that high.
On the other hand, you’ll likely lose your money if you’re a beginner that’s just trying to understand forex.
However, if you have good experience with forex trading, you can still lose your money. This means that trading forex involves high risk.
There are lots of things to consider before one can finally decide if forex trading is profitable or not. Most times, it depends on the kind of person you are.
So, if I’m going to answer this question directly, I’ll say yes, forex trading is profitable but it will take a lot of knowledge and effort. However, while you can make a profit trading forex, you may end up losing your money instead of making profit.
What Does This Mean
You need to know certain things before you start your trading journey. It might depend on how you can implement a good trading strategy. After all, you should not expect to make profit without a strategy.
Forex trading is technical and requires experience. And it’s not for everyone. Most people will lose while some will make profit.
This leads to my next point.
Why is Forex Trading Profitable for Some People and Ruinous for Most People?
It’s a known fact that most people that trade forex lose their money. Only a few were usually able to make profit trading forex.
To be specific, statistics have shown that forex trading is not profitable for 90% of people. The only ones that make good profits are experts that have lots of experience in forex trading.
If you’ve been trading forex without any profit, then it’s time to learn every bit about how forex trading works to be a profitable trader. If not, your desire to make a fortune trading will continue to be a mirage.
So, is forex trading profitable? Yes, it’s profitable for those that have good experience but ruinous for those without experience.
Now here’s what you should know.
What You should know About Forex Trading
Forex trading is based on competition and currencies are traded in pairs. It involves higher-than-normal risk which is the reason why some people make very high profits.
You should know that all traders can’t be profitable at the same time. This is because traders are competing against each other to make profit.
Traders speculate on whether a currency will rise or fall against the other. You’ll have to select a currency pair each time you want to trade, when you do this, you are telling the market that a currency will outperform the other.
For instance, if you choose GBP/USD, you’re trying to exchange USD for GBP. The market will then finds someone that wants to exchange GBP for USD and confirm the trade.
Depending on how the price moves, the market will then settles the trade and determine who makes profit. At the end of each trade, someone loses and the other person makes profit.
Now, you know that someone always loses while the other makes profit. As a result, every trader can’t be profitable at the same time.
Is Forex Trading Profitable For Some Currency Pairs?
It depends on your trading strategy. Most traders usually trade currencies that don’t fluctuate too often to increase their winning chance.
If you’re just starting, then trading low volatile currencies should be your best option.
However, while less volatile currencies help in increasing your winning chances, they won’t let you make high profit. Most expert traders trade high volatile currencies to make high profit.
So, the more volatile a currency is, the more profit you’ll make and vice versa. But forex trading can be profitable regardless of the currency you choose to trade.
Why is Forex Trading Not Profitable For Most People?
Considering the fact that forex trading is not profitable for most people, you’ll want to know the answer to the question “why is forex trading profitable for only a few traders?”.
I’ve discussed some of the reasons why forex trading is not profitable for most people below.
Lack of Experience
One of the major reasons why forex trading is not profitable for most people is inexperience. Most people that trade forex do not have the knowledge required to be profitable trading forex.
People go into trading probably because they’ve heard about different success stories of forex traders. So they think it’s what they can be doing to make profit. Another reason is that they’re deceived by the promises of making high profits by brokers that want to get customers.
If you just want to start your forex trading journey, then you have to invest your time to learn all the necessary things before forex trading can be profitable for you.
No Strategy
Most forex traders just trade forex without any real strategy. Just because you understand the basic concept of forex trading does not mean that you’ll start making money trading forex.
Some people tend to use strategies they found online which doesn’t usually work for them. Likewise, people use copy trading app to copy the so-called expert traders which, in most cases, leads to losses.
You should know that what works for someone may not necessarily work for you. Therefore, just because a strategy works for someone does not mean it will work for you as well. You’ll always find yourself in a situation that you just have to develop your strategy.
Not Managing risk
Most forex traders don’t make use of the stop-loss tools. And that’s one of the reasons they lose so much money. Stop-loss lets you limit losses on a trade.
Trade won’t always behave the way you think it will. And limiting your loss is always the right thing to do. At least if you’re going to lose, you shouldn’t lose more than you expect.
Expecting too Much Profit
Most people start trading forex with the aim of making a huge profit. While this is possible, you should know that it is very difficult even if you have a working strategy.
If you’re trading forex to make an unrealistic profit, then you’ll likely lose all your money. Forex trading is not easy for anyone even for expert traders that have years of experience in forex.
As we all know, most investment opportunities offer around 15% ROI a year which is a good return. So, if 15% a year is a good return, you should not expect too much profit from forex trading.
Although it is possible to make more profit from forex trading than other investments, it’s not simple as most people think it is. Trading forex can earn you a decent profit but there’s a greater chance of losing than winning.
Inability to Control Emotion
Forex trading involves high risk. And regardless of who you are, you must expect to lose at some point. At times, you’ll lose many trades in a row, kind of a losing streak. While this can be frustrating, it should be expected.
Losing some trades does not mean forex trading can’t be profitable for you. However, if you can’t control your emotion when you’re losing, you’ll want to end the pain as fast as you can which in turn will cost you more than you think.
So, you should be able to control your emotion if you want forex trading to be profitable for you. You should never invest what you can’t afford to lose.
Is forex trading profitable if you don’t make much profit?
Well, it will depend on your definition of profit. As I’ve said, you shouldn’t expect too much profit from forex trading. The little profit you make is still profit. That’s if you make any profit at all, though.
Even if it’s just a 1% return, it’s a profit unless you have a different meaning of something being profitable.
Once you have more money on your account than the amount you started with, you’re already profitable.
Post Summary
Below are answers to some of the questions most people ask about forex.
Is Forex Trading Profitable?
Yes, forex trading is profitable. However, earning profit is not likely to happen because you have a greater chance of losing your money than winning.
How is Forex Trading Profitable if So Many People Losses?
Although most of the people that trade forex losses, forex trading is still profitable for some traders. There’re some traders that are making it big trading forex.
So, forex trading is profitable regardless of the number of traders that lose. You just have to understand all the necessary things before forex trading can be profitable for you.
Which Currency Pair is The Best to Trade?
There is no good or bad currency pair to trade. Most people prefer low volatility currency pair because it does not change its exchange too often. On the other hand, high volatility currency pair fluctuates swiftly which is why most people do not choose it.
Therefore, the best currency pair to trade depends on your trading style. You should just choose the one that works best for you.
Is Forex Trading Profitable if I Trade Low Volatility Currency Pair as a Beginner?
If you’re a beginner, then trading low volatility currency pair should be best for you because it’s less risky. Low volatility currency pair, however, won’t let you make a high profit.
This means that high volatility currency pair will earn you a high profit while the less volatile one earns you a lower profit.
So, if I trade low volatility currency pair, is forex trading profitable? Yes, but not probable.
Conclusion
Trading forex is a popular way to make money in the financial market. And some forex traders are making it big trading forex. It is just that it’s not easy as most people think it is.
If you just want to start trading forex, then chances are, you’ll lose your money before you can be profitable. This is because it will take time before you get used to the technical aspect of the market.
So, is forex trading profitable? Yes, it is, but no for most who try.
It can be profitable for some people, not profitable for some, and for most people, it’s not profitable.
Now I believe this article has done justice to your question “is forex trading profitable”.
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