How to Make “Safe” Money From Forex Trading
If someone asks: Whether forex trading can be done without any risk? The answer is “No, there is not, and if someone is telling you this, they are only selling lies.” However, if someone questions: Is there a way to acquire safe money from forex without excessive risk? The answer is “Yes, there is.”
Forex trading differs from your regular job as you might suffer losses even when dedicating full time and money to it. In contrast, you might procure reasonable or explosive profits in a short amount of time when treading with a definite plan and calculations.
George Soros, one of the world’s most popular forex traders, is known as the man who crushed the Bank of England by making a hefty profit of $1 billion in just a single day through his skillful and timely utilization of the opportunity at hand.
That being said, do not let yourself be tempted by such once-in-a-lifetime cases to believe that you can also obtain huge returns in a day or two. I have given the aforementioned example to highlight the importance of “planning, knowledge, and timing” in the forex arena. Success only follows those traders who commit their time and efforts to study trading dynamics.
7 Steps You Could Take to Make Consistent Money From Forex
1. Start Small
Trading is a challenging and risky domain; hence, immediately starting trading with a large capital is not prudent. Even if you are confident about your skills and expertise, start small to familiarize yourself with the real market pressure. Through this gradual and steady process, you can learn about your shortcomings and considerably improve your trading approach.
Nonetheless, do not drastically reduce the initial capital. In such a case, the margin level for the executed trades may become insufficient to withstand temporary losses. In other words, without a reasonable account balance, you could blow your account before the trade actually go according to your speculation.
2. Determine Your Trading Style
Following a robotic and copied trading strategy given by a third party is one of the worst things you can do as a trader. You may not generate profits via a strategy from which another person is achieving returns. It is because every person has a unique personality, thinking, timing, and decision-making power.
You should establish a trading method tailored to your personality and temperament. You can obviously learn strategies and methods from professionals or experts; however, test them before applying them to your trades.
Only you can specify your patience and stability level and identify whether you can be a day trader or a long-term trader and whether or not you are getting good returns from a specific strategy.
3. Avoid Unrealistic Expectations
Having extravagant expectations about forex trading regarding the acquirement of quick gains or assuming yourself to be an “expert” after a few winning trades is a wrong mindset. If your only motivation to participate in forex trading is to get rich quickly, a harsh reality check can soon rupture your expectations bubble.
You should refrain from being delusional about the profit targets and understand the challenging conditions of the forex market. To summarize in one line, maintain a realistic trading approach to gain small but steady gains over time.
4. Draft a Fixed and Comprehensive Trading Plan
Being disciplined in the ever-changing dynamics of the forex market is the most prominent trait of successful traders. Arranging a trading plan with definite rules and regulations can prevent you from making irrational decisions during tough times. Certainly, trading without preparation and a strategy is no different from gambling.
Draft your trading strategies and check their suitability with the relevant financial instruments as each one has different volatility and movement patterns. Try to pinpoint the forex assets that are most harmonious with your trading methodology.
Retesting of strategies and setting two to three trigger rules for the initiation of trades can refine your trading style and winning rate. Plan and decide beforehand about the best possible responses to diverse trading scenarios and opportunities.
Here is an extra tip: use simple technical analysis tools and indicators to simplify the analyzing process. Do not try to work on overly-filled and tangled graphs.
5. Track your previous trades
Record keeping of your past trades is an excellent way to examine your positive points and shortcomings. Looking back at your executed trades can be an eye-opener as it demonstrates a comprehensive picture of your trading style and decisions.
Resultantly, you can identify your trading patterns that were best suited with the price movements as well as the scenarios that repeatedly lead to losses. Continue this learning process and remain aware of the market happenings to not fall behind the others.
6. Risk according to your capacity and preserve capital
Common mistake traders make is the opening of large trade positions compared to their risk capacity. The fact mostly ignored by them is that when leverage is increased, losses are equally magnified as the profits.
Therefore, never forget to apply proper risk management and setting of stop-losses at points where the market could potentially reverse. Apply reasonable leverage to play safe, not risking more than what you can afford to lose.
I would mention here a point mostly ignored by most traders: It is more crucial to preserve your profits than generate them in the trading arena. When trading without proper calculations and an uneven risk/reward ratio, one or two big losses can wipe out all the previous gains.
In other words, your ability to stabilize your gains would stipulate your long-term success as a trader.
7. Set Your Emotions Aside When Trading
Allowing your emotions to drive you can be disastrous for you as a trader. Even if emotions are an entirely natural part of our existence as a human, too much emotional involvement during trading always leads to a losing spree. For instance, anger or greed cause the traders to make rash decisions without any underlying plan.
Never forget that forex trading is not a magical realm to earn big quickly. Traders need to manifest strong commitment, patience with a solid mindset to achieve long-term success in this domain.
If you faithfully follow all the above-mentioned steps, the toughness of trading can be immensely mitigated. Resilience and disciple are the primary qualities necessary for a trader to earn “safe money”. Keep gaining knowledge and improving your skills to come out as a sensible, qualified, and proficient trader.