Can Forex Trading Make You Rich? Here Is All That You Need To Know And More! – Forex trading has become hugely popular amongst all traders as it is an easy way to make extra money. But have you ever wondered: can you make a living trading forex? Many traders have earned significant fortunes by trading in the forex market. 

However, it is essential to understand that forex is not just a quick scheme to get rich and earn money. Even the richest forex traders have to put in a lot of planning, use techniques and educate themselves about the forex market to make huge profits. Forex trading is a skill; like most skills, it also requires patience, technique, time, and experience to achieve perfection. 

Therefore, in this guide, we will try to achieve a clear answer about can forex trading make you rich and will also look at some techniques and key points that will help you avoid losses to a certain extent. Read below to find all your answers!

Can trading make you rich? 

Trading in the forex market, as you might be aware includes buying and selling foreign currency pairs based on the exchange rate. Sounds rather simple right? 

But, the question is can forex trading make you rich? 

Forex trading may make you rich if you are an experienced trader with refined skills or if you already have a lot of funds to invest. Now, if you are wondering that as a beginner can you get rich in the forex market, then you need to understand that forex trading can be a rocky highway that sometimes can either lead you to enormous losses or exceptional returns. 

But this does not mean that there is no scope for you to earn in the forex market. You need to learn some techniques, understand how the forex market works, and sometimes even copy the trading strategies of advanced traders to make your way. 

Also, to earn more in the forex market you need to invest more. Large investments sometimes come with potential risks but if you learn some forex trading strategies and risk management then you will be able to earn through forex trading.

How to become a successful forex trader?

If you research about can you make a living trading forex, then you will probably find answers like you need to have experience and understanding of the market. As essential as these points are there are some other factors also that can help you become a successful forex trader:

1. Find a reliable and good forex broker 

Your forex broker makes all the difference when it comes to getting profits in the forex market. If you have a broker that offers you advanced tools and techniques as well as educates you about market trends, then even a beginner can trade well.

Before, registering with a broker make sure it supports trading platforms like MT4 or MT5, has a wide asset selection, and offers features like trade alerts, copy trading, and more. Check out the list of best forex brokers UK in 2022 on forex broker reviews

2. Perform market analysis 

The forex market is ever-changing and therefore it is advised to perform a market analysis before you invest in any asset. Check for price fluctuations, asset value, and even demand for your investment in the forex market.

You can take the help of the resources provided by your forex broker and check all this information. do not make any investment decisions in haste as it can lead to potential risks. 

3. Setting your stop loss 

Irrespective of the trading strategy that you are following, it is important to always set a stop loss. Setting a stop loss allows you to define the closing price of your trade. It means that once your trade reaches the level set by you, it will close automatically, even when you are not around. Therefore, setting a stop loss would assure you that you won’t lose more than what you could afford.

4. Diversify your portfolio

Diversifying your portfolio is the practice of spreading your investments around so that your trading in not limited to any one type of asset. It is the simple idea of exploring your portfolio across several asset classes. This practice helps to help reduce the volatility of the market over time and can help mitigate risks. It does not guarantee profits or protection from risks but is a smart investment choice that can benefit in the long run. 

How much money can a beginner forex trader make? 

The forex trading profit per day, can not be determined until and unless you are aware of the risks in the foreign exchange market. Trading without knowing the risks may even incur heavy losses. 

1. Excessive Leverage 

In forex trading, leverage refers to a loan that you can take from your forex broker, to trade more. To get access to leverage traders have to pay a small initial investment, called a margin. During volatile market conditions, even the slightest price fluctuation in the opposite direction can result in substantial losses, which may be more than you have invested. 

2. Currency volatility

High degrees of leverage results in the quick depleting of the trading capital. In a situation of market volatility, the currency pair may suddenly move the markets before most individual traders have an opportunity to react.

3. Transaction Risks

Transaction risks are exchange rate risks, that occur due to the difference between the beginning of a contract and the time of settlement. Forex trading takes place 24 hours, which can result in a change of exchange rates before the trades have settled. 

Also read: Best Online Forex Trading Tips for Beginners: A Guide to Help You

Currencies may be traded at different prices at different times during trading hours. So, as the time difference between entering and settling a trade increases the chances of a transactional risk also increase. 

4. Unavoidable Market risks

The price movements of the currency pairs depend on several factors. Sometimes unforeseen changes in these factors can lead to potential risks. Changes like; 

  • Inflation and employment can affect the Central Bank’s decisions about monetary policy and interest rates.
  • Any new financial and economic announcements.
  • Political conflicts or events in the country. 
  • Strikes, geopolitical conflicts, wars, terrorist attacks, and natural disasters.
  • Changes in regulations, legislation, and tax policy.

5. Counter Party Risk 

In the Forex market, the counterparty refers to your forex broker. How much money a beginner forex trader make depends on the broker as it helps you open and close trading positions. The main risk here is that your broker is unable to pay you, either because it went bankrupt, because of poor regulatory enforcement, or even platform malfunction. 

This risk is quite difficult to measure as an individual trader, so only choose a forex broker that is regulated. By choosing a trustworthy broker that is subject to regulation from a reputable authority, you will be able to avoid the risk of the counterparty. 

Take Risks to earn more 

Considering all the risks mentioned above, you must understand that you can’t avoid all risks at all times. In forex trading, it is said that greater risks give greater rewards, so sometimes undertaking risks in forex trading can make you rich. 

Let us take an example to understand how much can a beginner forex trader make : 

Suppose a trader has $5,000 in capital funds, and they risk only 1% of their capital, or $50, per trade. Now in this example, a stop-loss order is placed five pips away from the trade entry price, and a target is placed eight pips away. This means that the potential return for each trade is 1.6 times the risk (8 pips divided by 5 pips).

Also read: All That You Need to Know About Pip Spread Forex Brokers

How much do professional forex traders make per month?

A successful forex trader works with strategy. Even the richest forex traders follow techniques and trading strategies that help them win profits from trading. 

Profits or returns in trading can measure differently for different people, while beginners can be satisfied with lesser amounts, advanced traders aim to make much more. So how much a professional forex trader make per month usually depends on the following factors : 

  1. The investment amount 
  2. The type of investment 
  3. Experience in the market and the forex broker 
  4. Whether or not they are paying any commission or extra trading fee
  5. Market conditions
  6. Trade execution and leverage 

Suppose a professional forex trader makes 10.000$ a day, using a strategy, while another, using the same strategy makes 10.000$ a month. Therefore it is not necessary that all forex traders make the same amount of money. It all depends on your style of trading and the factors mentioned above.

Who are the richest forex traders? 

George Soros

Born in Hungary in 1952, George Soros is one of the richest forex traders in the world.  He developed a strategy, in which he took highly-leveraged positions based on movements in currency rates. In 1992 he became successful and came to be known as the ‘man who broke the Bank of England’.

He earned over $1 billion from the trade and since then he has accumulated a net worth of $8 billion, making him one of the richest forex traders of all time.

Joe Lewis

Born in the UK, Joe Lewis at 15, sold his business to start currency trading. He worked with George Soros to bet against the British Pound in 1992, and for his contribution to the trade, got impressive returns worth $1.8 billion. Even today he earns a living trading forex and his net worth is close to $5 billion.

Bill Lipschutz

Bill Lipschutz is considered to be the richest forex trader in America. He started trading when he was in university, with $12000, which he received in inheritance from his grandmother. In the 1980s trading at Salomon Brothers, he made hundreds of millions of dollars. And today his total earnings sit close to $2 billion.

Andy Krieger

Andy Krieger working with Salmon Brothers acquired an immediate reputation as a successful trader, and in turn, the company rewarded him by increasing his capital limit to $700 million. 

Krieger focused his trades on the New Zealand dollar (NZD).  he used his high trading limit and leveraged his exposure by using foreign currency options that may have rivaled the New Zealand money supply, at the end of the trade he earned over $300 million in profits. 

Stanley Druckenmiller 

Druckenmiller started trading after acquiring a degree in economics and working as an oil analyst for a national bank. After that, he went on to launch his firm called Duquesne Capital Management. Today his net worth is about $2 billion. Druckenmiller has taken to philanthropy and has donated over $700 million to charity. He is also well known for offering a lot of advice to Forex traders on how can trading make you rich. 

Final thoughts 

If you are still thinking that can you make a living trading forex, then according to our guide, forex trading is a good way to earn some extra money. But it should not be the only thing you should rely on especially if you are a beginner. 

While, forex trading profit per day is different for different traders, if you follow all steps carefully then you will be successful in trading in the forex market. Choose a reliable forex broker, understand the market, and do not make hasty decisions and forex trading can make you rich! 

      Forex Broker Review
      Compare items
      • Total (0)
      Shopping cart