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Forex trading volumes
continue to
expand , with
daily turnover exceeding
$7.5 trillion , on track to reach
$10.0 trillion this decade. The Forex
market is a
decentralized over the counter (OTC) market. It is accepted as the most liquid market and is
operational 24/5 . The highly leveraged Forex market
attracts scores of
new Forex traders daily,
but how do Forex
traders make money ?
Top Forex Brokers1 Get Started 74% of retail CFD accounts lose money
Our
review will outline
how new
traders should
approach the Forex
market , ensure they
understand what Forex
trading is and is
not , outline Forex trading
facts , and discuss
strategies for
beginners to explore Forex Traders Make Money the Facts
Before diving into
strategies , beginners
should know facts . They
may appear
discouraging , but an
informed trader is a
smart trader , and a smart trader in turn is more
likely to be a profitable
trader . Rather than
viewing the facts as a
negative , consider how you can
benefit from them, and
structure your trading approach
accordingly , and
avoid the
traps of Forex trading.
Forex trading facts: 1. The
Forex market operates
24/5 , but
trading during select
periods results in
more profit potential, which we will cover later. Therefore, you can trade Forex
whenever you like , but remember that it may
not necessarily be
profitable to do so .
2.
70% to 90 % of retail Forex
traders lose money, while roughly
2% of retail Forex
traders trade for a
living successfully, but around
10% earn enough to
justify the
investment , time, money, and
effort .
3.
80%+ of daily Forex trading
volume is
algorithmic , and many retail traders find they face an uphill
battle trading against
algorithms that are increasingly powered by
machine learning and artificial intelligence
solutions .
Speed can be
critical , the time it might take a retail trader to open their Forex platform, algorithmic traders could have performed analysis selected a strategy and entered their positions, and already booked their profits.
4.
Most retail Forex traders
fail to
respect Forex
trading as a
highly skilled profession that
requires in-depth
education and
years of practical
experience . They approach it with a
hobby mentality , liken it to gambling with binary outcomes, and complain about their trading losses.
Before considering
opening and funding a trading
account , traders
should ensure they
spend the necessary
time on high-quality
education , available largely for free
online .
5. Many Forex
traders and
regulators fail to understand the
importance of
risk management and its relationship to
leverage . Leverage is an excellent
trading tool , and the Forex market thrives on it. Leverage can
magnify profits and losses
exponentially . The
key aspect to understand is that
leverage itself does
not cause trading
losses , but the absence of
risk management does. Irrelevant to the leverage a trader uses, a 2% loss is a 2% loss, where
leverage shortens the number of
pips that a trade moves against the trader
before reaching the drawdown limit of
2% .
What is Forex Trading?
Understanding
what Forex trading
is and
is not , is yet another
crucial step in
learning how Forex traders
make money .
Forex trading is: Buying and selling, or exchanging , one currency for another Conducted via currency pairs , where the first currency is the base currency and the second one is the quote currency, for example, the EUR/USD A highly skilled profession just like an engineer, a lawyer, a doctor, a physicist, or a mathematician, you need to study to be effective. Open 24/7 in a decentralized market The most liquid financial market An opportunity to earn money with lower capital requirements versus other asset classes. A potential means to earn active and passive income. Necessary for the global economy to function Dominated by algorithmic trading, machine learning, and artificial intelligence solutions. Filled with scams and frauds at the retail end of the market – so beware.
Forex trading is not: A get-rich-quick scheme. Gambling A market where a hobby attitude can yield consistent profits. A market for uneducated beginners An opportunity to earn money without experience and patience.
How Should Beginners Approach Forex Trading?
All
beginners should start with a high-quality
education . This can ensure they understand the
market mechanics and allows them to
spot scams and frauds. An
educated Forex
trader will
know what to
look for , where to find it, how to
create or
develop it, and how to achieve consistent and set
realistic trading
goals .
Here are essential tips for Forex beginners: Master trading psychology Trade free of emotions Use demo accounts to learn but understand their limitations. Keep a trading journal to self-evaluate your actions. Trade from a quiet place free of distractions Have realistic expectations (most professionals earn between 10% to 15% annually) Create a deposit strategy (a one-and-done approach is neither effective nor efficient) Develop a risk management strateg and execute it. Use a trading strategy that suits your personality and personal strengths.
How Forex Traders Make Money - Strategies and Must-Knows
Let us touch on
three must-knows if you want to
make money trading Forex and cover the ways you can get started.
Three Forex must-knows: 1. Trading
fees directly
impact profitability . Costs for major currency pairs during the London-New York overlap session
exceeding $7.00 per round lot are
expensive .
2.
Trading during
overlap sessions , when operating
hours of core financial centers
overlap , yields the
deepest liquidity and lowest fees through spread compression (due to shear number of participants) during each trading session.
3. Trade
when the
pros trade and
pause when retail traders
trade .
Here is an overview of Forex strategies traders should consider: Scalping - Best used on M1 charts to capture a few pips micromovements. Short-term trading - Ideal for M5 to H1 charts Day trading - Good on H1 to D1 charts Copy trading - For traders who wish to follow numerous strategies. Signal providers - For manual traders Account management - A traditional approach to portfolio management, have your account managed by someone else. Passive income - For affiliates and SEO marketers
Bottom Line
Forex traders have
multiple ways to earn
money from the
Forex market , but they should
start with high-quality
education and
respect the
Forex market as the
highly skilled and often
stressful career it is at times.
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