Trading on the foreign exchange market is one of the most popular activities on the Internet. For this reason, many people are interested in whether it is possible to get a lot of money on Forex.
Big money on Forex
Today, the bulk of those who are going to make money on currency trading is sure that the market is an analog of a casino. And for a serious income, luck is enough. Or, at the very least, a universal strategy that allows you to always and under any circumstances make exceptionally profitable transactions. They dream of investing a few hundred dollars to become millionaires soon. The reality, unfortunately, is harsh. With this approach, they will never see a lot of money on Forex.
Trading on the market should be perceived as serious, sometimes hard, and exhausting work. As in any profession, it requires training, the necessary knowledge, and most importantly, experience.
Where does big money come from in Forex?
The price movement in the market is chaotic and difficult to predict. There are many ways to help find out which way the quotes will go shortly. But none of them will give a guarantee.
Professionals understand that each subsequent transaction can both bring profit and end in loss. For this reason, they try to reduce the risk of large losses, strictly following the rules of money management:
- the transaction volume should not exceed 3-5% of the deposit;
- the potential profit should be greater than the possible loss.
Hence it turns out that putting 1 thousand dollars into the account, no more than 50 dollars should be involved in trading. This does not mean that the remaining funds are not used. They work, and constantly. Their main task is to cover the drawdown that occurs from time to time when the price moves in the wrong direction.
In addition, by involving only 5% in the trading, the trader protects himself from a bad luck streak. Even if he closes 10 trades in a row with a loss, he will still keep most of the deposit.
Money management rules outline approximate profit margins. 50 dollars will bring the trader from one transaction 50-100 dollars, at best 150 dollars. If he deposits not 1 thousand, but 10 thousand to the account, then the profit will increase 10 times.
Market participants prefer to count their income as a percentage for the year. They are the highest among large investment companies – 30-50%. Professional traders who have been trading for more than a dozen years have 20-30%. The rest – 5-20%.
From here it is not difficult to estimate. For example, a beginner wants to receive 120 thousand per year. His tactics allow you to have 10% of the invested funds. In this case, he should deposit 1.2 million.
How to make big money on Forex?
Of course, not everyone has an extra million. And he is ready to trade, risking losing everything. In no case should you rush, especially without having the necessary knowledge and experience?
First, you need to create your methodology for performing operations on the market. It should be clear, comfortable, and effective. Then check it in on a demo account for several months. And only then switch to real money.
And even here, there is no need to hurry. There is a big difference between trading with virtual funds and with real ones. It is advisable to increase the deposit gradually so that the adrenaline does not go off the scale and the heart does not shrink when the price goes into the negative.
Psychology is an important component of trading. You need to be able to cope with emotions. Do not despair at the first setbacks. Do not succumb to euphoria with minor success. Trading should become a routine process in which profitable and unprofitable transactions are taken for granted. And only after that, you can deposit a serious amount. And then the big money in Forex will certainly come.
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