One question that comes up a lot is: Is Forex Profitable?
Many times this question comes from retail traders that are not finding any success with their trading approach. When I say “trading approach”, I don’t just mean their trading strategy.
Your trading approach is much more than a trading strategy and we will cover that later.
The short answer is yes, Forex trading is profitable.
The slightly longer answer is yes, trading in the Forex market is profitable but chances are you won’t make any money.
How do I know trading Forex can be profitable? Because I’ve been swing trading Forex since 2008 and make money. In fact, you can take a look at my free Forex chart setups that I post every week using technical analysis and then update any trades at the end of the week.
Everything in those chart is for one reason: To teach you how to use a simple approach to trading Forex to make profits.
It’s one thing to make money trading and a different thing to keep the profits.
Your Biggest Job As A Forex Trader
I’ve mentioned it many times in my trading posts but the number one job you have as a trader is a risk manager. If you do not understand risk…if you do not manage your trades in the proper way, you will lose.
If you are risking too much per trade to withstand a string of losing trades, you will be out of trading faster than you imagined.
If you continue to move your stops around to avoid taking a loss, you will eventually lose your account. Your broker will be happy because you are probably a retail trader and your broker banks your loss, but you won’t be.
Your second job as a trader is simple: Enter trading orders.
If you are trading, you’ve done your homework and are trading a strategy that has a verifiable edge in the market. You have made a trading plan complete with which setups to take, how you will exit, where you will take your loss.
What Is Forex Money Management?
Forex money management is simply about risk. In short, if you take big risks, you can make a lot of money in a short period of time but the bad side of that is that a few bad high-risk trades and you lose a lot. Wins and losses come in a random distribution.
You never know if that next trading will be a winner.
When you trade a lot, over trader, that’s bad forex money management. When taking a lot of risk in a trade, that’s bad forex money management.
Learning Forex money management is the easiest thing. But doing it, applying it, sticking to it when everything else doesn’t seem to be working is really hard…and all it comes down to is the mindset.
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