Is There Money to be Made in Trading Forex (Basics No. 1)

So why should anyone bother with trading Forex? Well, to make money of course. And with unemployment rate steadily climbing up, a lot of people are looking for any possible means to make a living and provide for themselves and their families. Fully aware of this fact, Forex brokers and specialists are bombarding them with advertisements about possibilities of making it big through their services. But how much money is really there to be made in Forex and is it accessible to an average person?

If you are new to the Forex, the best way to answer the question is to look at what you can expect to make in the first few months. Actually, you can answer that all by yourself by thinking of what a university professor, an accountant, a restaurant chef or even a truck driver would initially make if they had no prior experience or training at their job.

Sincerely, any profession that requires skill needs education and training in order to acquire those skills before someone will pay for them. The same is true in trading. It may look easy, but that is because people are unaware of market’s characteristics, not because risks are not present. And unlike other professions, if you do not do well in trading, you will not hurt anyone but yourself, and nobody is stopping you to do just that.

On the other hand, it is true that market by itself offers huge money earning potential. Consider that on most days trading range in EUR/USD currency pairs is over 150 pips. Trading a single contract, that makes it $1,500 range. When you consider that you can trade on 400:1 leverage (which by most professional standard is as logical as betting all your money on roulette table), you can enter such a trade with less than $300. That clearly shows why forex is so risky. If you enter with such a high leverage, your account may double or be completely gone depending on whether the market moves next 25 pips in your direction or in the opposite one.
If you want to consider professional day traders, many of them are happy to average 15-20 pips a day, with me included. If they use somewhat conservative margin of 20:1, like I do, they can make $150-$200 a day trading a full contract for which they would need deposit of $5,000. Although you could trade every day of the week, making it 20-21 days a month, constant wear and tear will actually make you fit to trade probably only 18 days a month at most. Multiplying two numbers you can see how few grants a month can end up in your pocket while financing your initial investment with the balance of your credit card. The amount earned may be just enough to pay your expenses.

However, nobody trades just to pay expenses, and you should not trade to make only enough just to stay afloat and keep your head above the drowning line. Ultimately you will get tired, lose your balance, slip, and sink like a rock. Sincerely, trading is not about paying bills, and if that’s what you are after, there are much easier ways to make a ‘have to pay my next bill’ living. That is because pressure to make money to pay bills will be clouding your judgment,pressuring you not to take a loss (if you take a loss, how can you pay the bills?) when you are proven wrong. This can only lead you to one place, and one place alone...place where there's no money to lose because everything has already been lost.

Go to Basics No. 2