Is forex trading profitable in 2024? That’s the main question many market rookies face when they start to seriously consider trading. You, too, might be wondering the same thing because, let’s face it. There are thousands, if not millions, of different testimonials, both positive and negative, about trading forex. With all these mixed signals, you really begin to ask yourself, “Is forex trading profitable, or am I falling for the placebo effect?”
Lucky for you, this blog post is all about answering your questions. So, if you keep facing the same, “Is trading forex profitable,” questions, you should stick with us ’till the end. We will answer your question and give you 5 extra simple tips to make your FX trading more profitable.
Is Forex Trading Profitable?
So, in answer to this question,” question, we must say, yes and no. The fact of the matter is that the foreign exchange market (forex or FX for short) is a gigantic market full of profitable opportunities. However, seizing these opportunities and making the best of them requires knowledge, skill, technique, and dedication, which can be hard to muster all for a forex newbie.
So, while there certainly are people who are making the big bucks on forex, it’s not something you can easily achieve. In other words, forex is most certainly NOT somewhere you can get rich overnight. Rather, it’s a mountain you need to climb slowly and carefully to reach the very top. The catch here is that most people look at FX trading as a way to make a quick buck and be on their way, so when they hear about the hard work and dedication it takes to actually succeed, they just give up. So, if you also want that “minimum effort, maximum slay” effect, then forex is not the right place for you.
How Profitable Is Forex Trading?
Upon asking, “is forex trading profitable,” and getting the answer we just gave, people tend to enter their bargaining phase when they next ask, “okay, but how profitable is it? And how can I make it more profitable?” The sad news is that there are no definite answers to that question. However, after the passing of the ESMA rule in the EU, major brokers are now obligated to share a detailed list of their users’ profits and losses, which bears both good and bad news.
Their stats show that nearly 70% of forex investors lose money. It’s bad news because, well, that’s a huge number! However, this number used to be even higher before, going as high as 80% and 90%. This shows that all the forex-related educational material is paying off, as traders are now making more cautious and informed trading decisions.
But, how to make FX trading more profitable? You should know that there are things you can control and things you simply can’t. Telling them apart and finding your correct focus points can help you increase your profitability in itself.
How to Make Your FX Trading More Profitable?
Let’s start with the things you can control to try and effectively increase your forex trading profitability. There are 5 simple tips in this guide, which are basic yet crucial. Still, if you think you need a more in-depth guide on how to gain more in forex, you can visit our list of top 10 successful forex trading tips and secrets now.
1- Stay Dedicated to Learning
One of the leading causes of forex losses is a lack of knowledge and technique. So, before doing anything else, you need to first take the time to study the market as much as you can. Start from the basics and work your way up gradually. Of course, it’s not really possible to learn all there is about the foreign exchange market. Still, the more knowledgeable you are, the more the odds are in your favor.
Another aspect of learning forex trading is practicing it. Find a broker with robust demo accounts that can help simulate real-world circumstances for you and practice as much as you can.
2- Find Your Ideal Trading Plan and Stick To It
As you’re learning more and more about the forex market, you should start to develop a well-planned trading plan for yourself. This will be your step-by-step guide on how to trade. It should be so comprehensive that if you got amnesia the next day, you would still be able to follow it and open positions that are relatively profitable. So put everything there. We mean it.
How do you look for entry and exit points, what’s your risk management strategy, how do you analyze your trades, etc., it should all be there. Developing a trading plan is, of course, not that easy. There are a lot of factors that contribute to a good plan. So, if you think you can use some help with that, we suggest you visit our comprehensive guide on developing a decent trading plan. After developing a plan, stick to it and trade with discipline. Don’t let emotions like fear and greed cloud your judgments and stay rational.
3- Watch Your Leverage
Those who are just starting to trade often face the question, “forex trading vs stock trading; which is more profitable?” And while forex trading may seem like the more profitable option because of its less dramatic volatility, there’s one factor that makes trading forex just as dangerous as trading super volatile markets: leverage.
Leverage is basically the money you borrow from your broker, open a big trade with, and then give back to your broker again, which leaves you with the net profit or loss of your big deal. Using leverage, you can trade major positions with a relatively smaller capital.
Since covering the concept of leverage fully requires a bit more space than a little paragraph, if you’re interested in learning more, visit our guides on leverage and leverage trading.
4- Find a Good Broker With Robust Platforms
Your forex broker and trading platform also play a huge role in your forex trading profitability. Start by looking for a broker with clear regulatory compliance, positive reviews, and robust platforms. The ideal candidate should offer you a wide variety of assets to diversify your portfolio with, 24/7 support to fully cover your back, and low trading costs to save you money. Lastly, if there are any quality IB programs or educational material, even better.
Knowing all this, it’s time to add ITBFX to your list of prospective brokers for forex trading. Our long line of positive testimonials attest to our commitment to quality services, support, and improving ourselves. Our modern trading platforms include MetaTrader 5 and ITB Trader, both comprehensive options. While trading with us, your trading costs would be minimized, with spreads starting from 0.0 pips and commissions being nearly non-existent. Moreover, our IB program provides you with other ways to make forex trading profitable.
5- Manage Your Risk Religiously
The most important thing you need to do to increase the profitability of your forex trading is to manage your risk religiously and rigorously. Don’t let emotions control your trading decisions, set your stop-loss and take-profit levels with precision, and diversify your portfolio as much as you can to back you up.
There are many other risk management techniques you can incorporate into your trading routine, which can’t all be named here. You can find a more comprehensive list of risk management principles here. Remember, all these techniques should first be practiced and set to perfection before you risk your real capital.
What Can't You Control?
There are also things you just can’t control. While they might be unfortunate and, frankly, annoying, keep in mind that many people face them with you. And if they can make it work despite these factors, so can you.
1- Market Inefficiency
Market efficiency refers to a state in which all relevant market data is completely reflected in asset prices, and there’s no room for insider information to be used to get that trading edge. As dreamy as it sounds, it’s not true. There are always gonna be big institutes that know something that you don’t, and they’re gonna milk that info well. So, instead of getting too caught up in what you don’t know, focus on what you do know and make that work. Unless, of course, you wanna become one of the insiders, too. Wink wink.
2- Unexpected Events
There may always be some sort of unexpected event that drastically changes the market. If even market insiders don’t know about something, then you are all truly in the same boat. The good news is that these sorts of events seldom occur, so there is no need to lose any sleep over them quite yet.
3- Technical Issues
Technical issues are another determinant of your forex trading profitability. Power outages, internet problems, technical errors with your broker or trading platform, and computer issues can always have a disruptive impact on your trading journey. You could do some things to minimize them, but you can’t fully control them.
4- Fraudulent Activities
Many people get creative after learning that they can’t make a billion dollars in forex overnight. There is always a bad bunch in the market, trying to con and manipulate their way up the success ladder, which could also impact you negatively. While you can take more cautious steps, like choosing your broker with strict criteria, there’s nothing you can really do about them.
Bottom Line
Is forex trading profitable or not? That’s the ultimate question you’re gonna face after you hear all of the success and horror stories about the market. While it’s not a fairytale to earn money trading forex, you also can’t expect not to lose any money or to get rich overnight. While there is always the risk of not making it in the forex market, there are steps you can take to make success more plausible.
This blog post answered a basic yet crucial question: is trading forex profitable? We also gave you 5 tips to make your forex trading more likely to succeed and introduced you to some external factors that you need to accept and move on from if you really want to make it big. If you’d like to learn more about forex trading, you can also visit our social mdeia.
Forex trading can definitely be profitable, but it's not a land of opportunities that guarantees million-dollar wins. When entering FX, the odds are against you. But you can take certain steps to make your trades more profitable over time.
First, learn what you can and can't control, and then focus on those areas within your range of power. Learn continuously, stick to your trading plan, avoid overleveraging, find a good broker, and manage your risk.
Many factors can impact your forex trading's profitability. They include your prior knowledge and dedication, trading plan, broker, risk management techniques, unexpected events, technical issues, and market inefficiencies.
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