It’s quite common for traders to dream of getting financial freedom and self-employment by supporting themselves through profitable forex trading online. Ther e would be no more boring job, no boss, no wasting time with administration, pointless emails, and endless meetings. But is this idea really possible?
The Amount of Money People Can Earn in Forex
The truth is, no one can tell how much money traders can make in trading forex – not even the most skilled forex traders because no one can control the market. Even if they are so good that they typically have a winning month and every year is a win, the exact amount they make still depends on what is happening in the market, which no one can predict with certainty.
One sensible way to decide what to aim for before starting live trading for an income is to calculate the terms of probabilities. To calculate the said probabilities, traders must work backward from their average trading performance, draw-down and starting capital, and calculate the average trade expectancy.
Calculating Trading Performance
First of all, traders need to know their capital in trading. It’s important traders understand that the more money they risk, the less money they have. Also, the more money they need to pay their bills, the more challenging things will be. There is a massive difference between live trading with money people can afford to lose to make enough money to pay for luxuries and risking life savings to profit that pays the bills.
In addition to that, traders must know their typical trading performance over the full range of market conditions, as if they have been trading for years. After getting the numbers, they should consider the amount of draw-down they could tolerate. Then, traders can have an idea of their money management and leverage they will use and calculate the possible range of cash incomes and losses they are likely to experience in a typical month.
Always remember that the real performance might not be as good as the stimulated performance as making decisions over a long time with real money at risk is more complicated than stimulated trading. Also, many retail forex traders are not profitable, so traders must be at the top of their game.
One more crucial factor is the psychological stress of trading online for a living. Not being emotional about the outcome of any trade plays a vital role in its success. If traders need good results to pay their bills at the end of the month, keeping a good attitude becomes extremely hard.
A perfectly smooth equity curve offers the least stress. However, it’s difficult to achieve, and traders will probably need to look for a way to cope with the unexpected drops in the curve without losing cool.
A Realistic Plan
If traders aim to make trade as a living, they must consider making a plan to transition into this gradually. Some may think that they will do better after devoting all their working energies to live forex trading, but this might not be the case. Traders won’t immediately make money by scalping than by position trading – though it seems logical that the more time they pour into it, the more money will come.