Is it possible to earn a sustainable income through Forex trading? This is a common question among aspiring traders. The answer is yes, but it requires consistent and correct actions. Many traders lack the necessary skills, discipline, patience, and realistic mindset to succeed in the market long-term. However, with the right knowledge and approach, it is achievable. The challenge lies in acquiring the necessary skills and consistently applying them.
What is the required amount of capital to sustain a living as a Forex trader?
The first and foremost aspect to consider is having sufficient starting capital. Inadequate funds imply that making a living from Forex trading may not be possible for the time being. The exact amount of money required to trade full-time differs for each individual. However, effective risk management dictates the need for a significant amount of funds to trade a substantial position size that can earn enough to support oneself without risking an excessive amount of the account on any single trade.
Part-time trading for additional income is a feasible option in the early stages of one’s trading career. Consistent and sustainable profits can still be earned even without having adequate funds to trade for a living. Instead of focusing on quick profits, the focus should be on building a track record of consistent profitability and self-confidence, with profits following suit. Irrespective of the amount of funds available, success in Forex trading requires proficiency in the mechanics of successful trading. Becoming a skilled trader should be the primary objective rather than fixating on the amount of money traded, as successful traders attract funds and private investors seeking their services. Early-stage traders should aim to become good part-time traders, as this is crucial for their future success.
In conclusion, a relatively large amount of funds is necessary for full-time trading, but profitability is equally important, regardless of the account size. Making consistent profits on a small or medium account is a pre-requisite for achieving similar results on a large account, as the numbers are simply multiples of the same digits.
Learn to trade the daily charts:
To have a realistic chance at making a living as a Forex trader, mastering trading on the daily charts should be your top priority. It is one of the most crucial pieces of the puzzle to become a successful trader.
The daily chart provides the most accurate and frequent price action trading setups. By analyzing the daily chart, you can get a clearer, more relevant and accurate view of a market’s price action compared to any time frame below it. Although the weekly and monthly charts offer an overall view of a market’s movement, they don’t provide enough setups for the short to mid-term retail Forex trader. The daily chart provides sufficient setups every month to help you make consistent money while filtering out unreliable trade signals of the lower time frames. Thus, the daily chart should be your primary or “core” price action trading chart.
To trade full-time successfully, you need to adopt a “sniper” mentality, meaning you focus on making sure everything is perfect before risking your money. Combining this high-reward/low-risk “sniper” mindset with a high-probability trading strategy like price action is your edge in the market. Therefore, you must learn to trade price action setups on the daily chart first. Focusing on trading higher time frames will provide you with a better perspective on the markets and greatly reduce trading errors.
Trading Forex for a living is the result of doing a lot of things right…
Becoming a Forex trader who can make a living from trading requires more than just having sufficient funds and trading the daily charts. While these are crucial, there are several other important things you need to do to succeed, such as:
- Mastering an effective Forex trading strategy, such as price action, and becoming an expert in it.
- Creating a tangible and practical Forex trading plan that is based on your trading strategy. You should review and update this plan regularly as you learn and grow as a trader.
- Maintaining a Forex trading journal to keep yourself accountable and disciplined, and to create a track record of your trades.
- Determining a logical and comfortable risk amount for each trade, and adhering to proper Forex money management principles.
- Avoiding over-trading, which is the number one reason why many Forex traders fail to make a living from the market.
If you have enough funding, have mastered the daily charts, consistently execute your edge, follow your trading plan, record your trades, and avoid over-trading or over-leveraging, then you have a high chance of succeeding as a trader. However, you need to do all these things right, not just one or a few of them. Trading for a living is not easy or a get-rich-quick scheme; it requires consistent effort and discipline.
Acquiring the guidance of a successful trader can accelerate your progress towards your trading objectives…
Just as with any other profession or skill, having a mentor to teach you the intricacies of Forex trading is likely the most efficient and effective method to achieve your trading goals.
Trading involves numerous human factors that require significant effort to master. If you can effectively combine your technical skills with these human elements, trading for a living can become a feasible objective for you.