Making a living from Forex trading is challenging
When people hear Forex success stories from their friends or family members or read them on the Internet, they usually get the impression that trading FX for a living is very easy and doesn’t require much knowledge or experience. They tend to believe that it doesn’t take much effort or financial commitment to start Forex trading as a full-time job.
But oftentimes, the reality behind such stories is less exciting. Sure, buying currencies at one point of time and selling them at another while getting large payouts might seem easy, but it’s most certainly not. There are so many things to consider before one becomes a successful Forex trader and gets sufficient income from it.
Now, it’s not to say that trading Forex for a living is impossible; it is, but it usually requires getting knowledge
and experience, as well as opening huge accounts with hundreds of thousands of dollars in size.
Popular misconceptions with trading FX for a living
Before we get into what it takes to become a successful full-time Forex trader, it’s worth taking look at some of the common misconceptions behind the Forex failure stories because, again, these are the expectations that many people have when wondering, if can anyone trade Forex for a living. Here are some of the most popular mistakes new traders make:
- They believe success will come to them even if they have no experience;
- They think the payout they’ll get at the initial stage will be sufficient for their expenses;
- They fail to recognize the fact even if they have the experience, Forex trading is still risky and when someone succeeds, others usually fail;
and in general:
- They don’t have experience/knowledge;
- They don’t have proper expectations.
Success doesn’t come knocking on your door
The first misconception is associated with the above-mentioned success stories that people hear. But what they fail to realize is that those successful Forex traders have also been beginners at some point and that they have made mistakes - a lot of mistakes, probably.
And believing in sudden success usually has a bad effect when people start trading Forex for a living. Either they make a deposit of couple-hundred dollars and expect to get a fortune out of it, or spend thousands of dollars and lose it shortly afterward.
Smaller positions don’t bring large payouts
Another misconception that we mentioned earlier is the belief that traders can turn Forex trading into a full-time job right away. But the reality is different. In the initial stages of trading, people tend to get smaller payouts.
And what is more, if they want to actually make a career in Forex, they usually take a very small amount of that payout for everyday expenses. This means that when they suddenly switch from full-time jobs to full-time Forex trading, they find themselves in a bad financial situation.
Even the experienced traders can lose
This next mistake is associated with the safety of Forex trading. Many beginners think that if they acquire enough knowledge and experience, the risks will suddenly go away.
But with that belief, it becomes easy to make bad financial decisions. For example, a moderately experienced trader, who thinks that their knowledge won’t allow them to make mistakes, might put large funds into trading and with a sudden change in currency prices, all the money simply goes away.
How much capital to trade Forex for a living?
So, these common mistakes and misconceptions are making it hard for beginner traders to actually switch to full-time Forex trading for a living. But it doesn’t necessarily mean that one cannot avoid them and become a professional Forex trader in the future. This next section will cover the most popular suggestions that successful full-time traders offer.
Taking baby steps and not expecting instant payouts
First things first, traders at the beginning of their trading career tend to take things slowly and learn new trading skills along the way. This means they’re reading books and guides, watching educational videos that explain how Forex trading is done and what its main elements are.
This method also includes a certain mindset that we have already mentioned in the misconceptions part. So, instead of expecting big payouts right away, traders make up their minds that their trading funds probably will not be able to support them financially for a while.
Combining Forex trading with existing job
Beginner traders tend to ask: Can you really trade Forex for a living? While at the initial stages, the answer to that question is probably “no”, some traders try to combine Forex trading with their existing jobs. This way, they get the idea about how easy it is for them to actually trade and get real payouts. And their jobs are still there to provide financial stability while they test themselves in the new field.
Now, this combination of Forex trading and a full-time job depends on many things. For example, if you don’t have sufficient experience in trading, it might be a good idea to use all the spare time that you have for Forex while still maintaining the job. As you become better at it, you can combine, say, 90% work and 10% trading (the numbers can be different for various people).
Gradually increase the budget
One of the main points that are very important to keep in mind is that when trading Forex, the majority of funds on the account stays there. Usually, a trader can withdraw 1% to 3% of their funds from their accounts for everyday expenses. The rest of it is used to buy and sell currency pairs.
So, this means that the initial stages don’t usually allow Forex traders to support themselves financially. That’s because to trade Forex for a living, smaller deposits and position sizes
are almost never sufficient. That’s why it is usually a good idea to maintain the existing job and gradually switch from it to Forex.