How to make money off forex

Before you start trading, you should learn about the different types of markets available to trade, and which one you are most interested in following.

Free forex bonuses

How to Make Money in Forex Trading: A Complete Guide for Beginners, how to make money off forex.

In addition to trading forex, you can also consider trading commodities, indices, and shares. The best way to learn about a market is to read about why others believe it’s moving and the different catalysts that might drive the price or exchange rate in a specific direction. For example, you might start with looking for a style of analysis that is generally provided by reputable brokers such as alpari. Your goal is to see what type of analysis they offer and what type of actionable ideas come from the analysis they provide. You can also look through a broker’s education section and see if they provide information about why the markets move. In addition to looking at a broker’s education section, you can scan the markets for websites that focus on financial markets education. The best way to determine if an economy is strong is to be able to evaluate countries financial information. This could include their employment information, their GDP, as well as inflation information such as the consumer price index. Most reputable brokers will provide you with a forex economic calendar where you can see what economists expect relative to history as well as the actual release. What is important about fundamentals is that each new piece of information can alter the direction of an exchange rate. If the economic data is greater than or worse than expected, an exchange rate will move to reflect the new information.

How to make money in forex trading: A complete guide for beginners

The foreign exchange market is the world’s most liquid market, with more than 5-trillion a day exchanging hands. The market is liquid 24-hours a day, 5-days a week, opening in the evening on sunday during north american trading hours and closing at 5-pm on friday evening during the same time zone. If you are a beginner and just dipping your toe into trading the forex markets, you should consider following the market and increasing your understanding of why exchange rates move before risking your hard-earned capital.

Learn about the financial markets

The financial markets allow investors, businesses, governments and central banks a place to transact in an open market, exchanging their risks to meet their financial needs. A corporate treasurer might need to exchange profits in euros into dollars, just as a speculator believes that the EUR/USD will rise. There are thousands of reasons why exchange rates and prices moved over a short-period of time, generating noise as participants look for an optimal price to enter or exit a position.

Before you start trading, you should learn about the different types of markets available to trade, and which one you are most interested in following. In addition to trading forex, you can also consider trading commodities, indices, and shares. The best way to learn about a market is to read about why others believe it’s moving and the different catalysts that might drive the price or exchange rate in a specific direction. For example, you might start with looking for a style of analysis that is generally provided by reputable brokers such as alpari. Your goal is to see what type of analysis they offer and what type of actionable ideas come from the analysis they provide. You can also look through a broker’s education section and see if they provide information about why the markets move. In addition to looking at a broker’s education section, you can scan the markets for websites that focus on financial markets education.

Learn to do your own analysis

There are two main types of analysis that forex traders generally focus on, which include fundamental and technical analysis. Fundamental analysis is the study of macro events that will alter the course of a currency pair. Technical analysis is the study of price action, including looking at momentum, trends and reversal patterns.

Fundamental analysis

The fundamentals surrounding the forex markets is based on the interest rates markets of each of the currencies that make up an exchange rate. For example, if you plan on trading the EUR/USD you want to have a gauge of where interest rates are likely going in the eurozone as well as the united states. In general, the stronger an economy, the more likely the central bank is to raise interest rates, which help drive up market interest rates. The reverse is also the case for a weaker economy where the central bank and market forces will likely drive interest rates lower.

The best way to determine if an economy is strong is to be able to evaluate countries financial information. This could include their employment information, their GDP, as well as inflation information such as the consumer price index. Most reputable brokers will provide you with a forex economic calendar where you can see what economists expect relative to history as well as the actual release. What is important about fundamentals is that each new piece of information can alter the direction of an exchange rate. If the economic data is greater than or worse than expected, an exchange rate will move to reflect the new information.

Technical analysis

Technical analysis is the study of historical prices. Although the past is not always a predictor of the future, different changes following specific studies can give you a gauge of where prices might move in the futures. Some of the more popular technical analysis studies include evaluating momentum. Momentum is the acceleration or deceleration of price changes. If you are interested in learning about technical analysis, you can look at your broker’s education section, or follow their technical analysis forecasts. There are also several websites that will provide you with education on different types of technical analysis tools. Some of the more popular include the MACD, the RSI, and stochastics.

Find good broker

Your forex broker facilitates the execution of transactions. While this is their most important function, there are many features a broker like alpari brings to the table which you should be aware of prior to depositing funds at that broker. First, do some due diligence. Look up reviews by your prospective broker and make sure there are no red flags. Fraud alerts or issues with withdrawing funds are the most important. You also want to make sure there is efficient customer service. You do not want to frustrate yourself by finding a broker who will not answer questions.

The next step is to evaluate the platform. Does the broker have an education section or generate technical analysis forecasts? Additionally, you want to make sure that your broker offers clients a financial calendar. Additionally, you want to find out about the leverage they provide to clients. Higher levels of margin will provide you the option to generate more revenue.

Start with a demo account

Most reputable brokers will offer you real-money accounts as well as demonstration accounts. A demo account is one where you are trading paper money, not real capital. Most good demonstration accounts offer nearly all the products that are available to trade will a real-money account. The prices will likely be in real-time or close to real-time. In addition, you will have access to most of the education and forecasting information your broker provides to real-money clients. Once you feel like you’re ready for a real-money account you can make the switch from a demo account to real funds.

Summary

There are several steps you should take before you start transacting in the forex market. You need to first learn about the financial markets and the type of information you can learn about prior to trading. Try to learn about both fundamental and technical analysis. Find a forex broker that you believe is trustworthy and provides a plethora of information. Lastly, use a demo account before you begin to risk real money.

Fxdailyreport.Com

For beginners, the forex market can be hard to navigate. There is a lot of jargon that you have to wrap your head around in order to be able to make any reasonable profits. The problem is, it takes a lot of time to master all the crucial skills that are required to qualify as a professional. Often times, many novice traders give up without making a dime.

But do you really have to trade to make money on forex? What if there was a way to invest profitably without actually having to trade? The good news is, there is a way. It is called forex copy trading.

What is copy trading ?

As the name suggests, copy trading is a form of forex trading where you copy or replicate the trading patterns of other traders. This is a trend that emerged in the early 2000’s and has over the years proved to be a real savior for inexperienced traders. With copy trading, also known as mirror trading or sometimes social trading, you can make profits as a forex trader even with minimum skills.

The only skills you require is to understand the whole concept of copy trading, that is mostly, how to choose a good trader to follow. You should, however, keep in mind that forex trading, in general, is risky and high returns are not guaranteed. Although copy trading gives you an opportunity to make profits without investing in research and having to understand the ins and outs of forex, the risk is still there and a lot of caution is required.

In most cases, forex copy trading can backfire because of a poor choice of traders to follow. That is why it is important that you carefully analyze your potential “masters” using the stats provided by the copy trading platform of your interest to make good money.

Below are a few tips on how to find a good trader to follow.

How to find A good trader to follow

The following tips will help you land the perfect trading pro:

Discover the most followed traders

The number of followers often point to the credibility and prowess of that particular trader. If a potential professional is followed or copied by many traders, it usually means that they have consistently recorded outstanding performance.

Analyze their followers/copiers

Sometimes followers can be fabricated. That is why you should critically analyze the followers to ensure that they are real humans. Another reason for this is to ensure that the follower base is consistently growing. If the number of traders copying your potential professional grows and suddenly drops, it may mean a drop in good performance. However, if the followers are ever increasing, you should add that investor to your list.

Should have consistent monthly performance

Your search for the perfect trader should not end with the most followed. Sometimes, they might have a lot of traders copying them, but the balance between profits and losses is not promising. That is why it pays to dig deeper and unearth trading gurus who have posted good and consistent monthly performance.

Number of trades and time on a platform

Traders who have been on the platform for a long are most preferred. They are usually more experienced and know their way around trading. The number of trades conducted is also another indicator. The person you wish to follow should have done a good number of trades with consistent profits.

You might not find the perfect trader to follow, but as you gain more useful skills, you will be able to make more constructive analysis and choose wisely. The type of copy trading platform you choose also matters. A lot of seasoned traders use credible forex brokers and you will hardly see them on new platforms or those with a bad reputation.

Benefits of forex copy trading

Copy trading presents a lot of good opportunities for both those who copy others and those who are copied.

You gain invaluable trading skills from professionals you follow

There is a lot of transparency as the trading history of the trader is publicly disclosed to followers

You can make passive income without actively trading

You don’t have to understand all the aspects of forex trading

With forex copy trading, you can make good money without having to actively trade. The point is to choose the right trader to follow by carefully analyzing their profiles and utilizing the stats provided by the various platforms.

How to make money trading forex - A beginner’s guide

To put it simply, the basis of making money trading forex sounds relatively easy: when the price is low, buy; when the price is high, sell.

However, supposedly up to 96% of traders lose money and end up quitting altogether. Conversely, other sources have suggested that actually, traders win more trades than they lose, but often their losses are larger than their gains .

So, making money trading forex can be… let’s say… complicated.

It really requires a mixture of the following:

Patience . You need to be patient to learn and patient to earn.

Understand forex . You need to know the ins and outs of the forex market.

Understand risk management . You won’t make money if you’re part of that 96%!

The ability to strategise . You need a plan if you want to be profitable.

If you don’t have any of those and do not have the time to invest in them, trading forex might not be for you.

The best way to learn all of the above is with a forex trading course. Trading education is currently offering a free forex trading education for beginners. Click here to find out more.

The basics

FX basics, how to make money trading forex

If you’re an absolute newbie, then it is highly likely that you don’t know what forex even is.

In that case, we should start from the very beginning.

The forex market shifts $5 trillion a day between traders, buying and selling currency pairs and is the largest market in the world.

A currency pair is the rate of exchange between two countries' currencies.

For example, at the time of writing this article, the exchange between the EUR (euro) and USD (united states dollar), which would be displayed as EUR/USD, was 1.1252.

That means that for one euro, you could buy 1.1252 of USD.

These rates are constantly changing , in most cases the last two digits, up and down. We call this fluctuation in price liquidity.

Traders are looking for opportunities to buy one currency at a low rate and then sell it for a higher rate.

That is basically how you trade forex.

How much money do I need?

Forex trading is a good choice for many traders because it requires less capital than other forms of trading/investing, such as stocks.

This is because of the way currencies are broken down. Most, with the exception of USD/JPY (united states dollar/japanese yen), are broken down to the fourth decimal, which is called a pip .

Most financial instruments cannot be broken down to such small figures.

Even if you’d actually prefer to trade stocks or another instrument, forex is a good place to start and help you understand the fundamentals of trading and potentially gain some capital.

Technically, you’ll need enough money to open a trading account, which can vary quite significantly depending on different brokers. Some brokers don’t require a minimum deposit, while others may require as much as £500 or more.

With the money you have used to open your account, it is best that you only risk about 1% on any trade . That money can go very, very quickly.

Remember, at the very beginning, it is more important to learn how to trade than to make a profit . If you lost money, investigate how it happened and make sure you don’t make the same mistake twice.

If you found this article by googling ‘ how to make money with forex ’ or anything like that, you are 100% not ready to start using leverage. Leverage is something you should leave until much later .

Likewise, you should keep in mind that big profits often require big investments .

You also need to think about fees as well. Unfortunately, that nice little profit you make when you trade might not be the entire sum of money you’ll actually make.

Though most forex brokers will not charge a commission on your trades, some might. There are also specific fees to bear in mind as well, such as swap fees , which are what brokers charge you for holding a position overnight.

Luckily, if you’re from the UK, you won’t have to pay tax on your earnings from forex trading. However, if you’re based in another country, you should check what the tax laws are on income gained from forex trading.

How much time do I need?

Before we talk about how long it will take for you to be ready to start trading and making money, we need to talk about having the right mindset .

Look at trading as a ‘business’ not a quick way to make money . No business is immediately profitable, especially if they are still learning when they start operating.

The best businesses need to have a business plan and that plan can take time to develop.

Persistence is key. Some traders only really start to make money after three to five years.

The real question is: how much time do you have? If you have a full-time job and other commitments, these, of course, will come first. You need to be honest with yourself about the amount of time you can devote to learning.

After learning to trade, finally, you can start practising.

Be mindful that not only might you sometimes lose money, you sometimes might not be able to find an appropriate opportunity to trade at all.

How much money can I make?

Look, you’re not going to become a millionaire overnight. Unfortunately, that’s something all forex traders need to accept.

As you would with a salary, you need to look at your profits over a long period of time , such as a month or a year.

As we said earlier, when you start trading, you should ideally be risking only 1% of your account per trade.

You need to think about how many pips you’ll gain on each trade.

To be honest, this is something you will need to figure out for yourself. Though most beginners will look to gain around 10 to 15 pips per trade as practice.

However, as you acquire more experience, such gains will not be worth your time. In fact, it is highly advised that you don’t waste your time agonising over such gains and instead look for larger, less time-consuming, profits.

For many traders, making between 50% and 55% is considered successful and profitable . Over time that small percentage builds up.

Win more than you lose. But don’t chase those losses !

Where can I make money trading forex?

Retail forex traders make trades via a broker in the form of a CFD (contract for difference).

Now, your mental image of a broker shouldn’t be of a guy in a suit, sitting at a desk and waiting for you to call him. We live in the 21st century after all.

Practically all brokers operate online . They utilise high-powered data connections to push through your order to an exchange where it will be fulfilled.

You place these buy and sell orders through a platform which can either be web-based, which is very popular these days, an application on your desktop or smartphone, such as MT4, MT5, ctrader, and some brokers can even enable you to make trades via a smartwatch.

There are numerous exchanges covering different time zones around the world. These exchanges allow us to trade forex, 24 hours a day, from sunday 6 pm till friday 5 pm, EST (united states eastern standard time).

Not all brokers are the same. In fact, they can operate in very different ways.

There are two primary types of brokers: dealing desk , which is often referred to as a market maker and non-dealing desk , which can be either STP (straight through processing) or ECN (electronic communication network), and there are also DMA (direct market access) brokers.

In most cases though, brokers will offer a mixture of the above, in the form of different account types.

While it may sound appealing to use a broker with more direct access to the forex market, choosing a broker should really be down to your preferences .

Strategy, strategy, strategy

Strategies are how you make your money.

Without a strategy, you can’t really say you are even trading. You may as well be gambling at a roulette table .

You can’t rely on just one strategy . In fact, many of them can only be used in certain circumstances, depending on the direction the market is heading. For example, trending upwards, trending downwards, or simply ranging .

You need to assess the market before setting up a strategy. Then, when you are able to confirm a change has emerged in the market, you need to put your strategy into action.

Strategies are also much more effective at making big gains . Without a strategy, you cannot expect to make large gains at all.

Popular trading strategies seek to make a profit from the changes and abnormalities of the market.

Another important part of strategising is that they can also be used to mitigate risks, which brings us to the next section.

Let’s talk about risk

This should always be at the front of your mind. It’s very natural to think about the rewards of successful trading, but we also need to plan for our losses as well.

We need to think about what we might lose should our plans fall short or even fail completely.

In forex trading, you can’t afford to not be prepared . Nothing should catch you by surprise.

To understand it, we need to understand our risk-reward ratio . In other words, how much are you willing to risk in order to get a reward?

Ideally, your risk should be low and your reward should be large , or at least larger than your risk. The further apart the two numbers are the better.

It really is possible to lose everything trading forex if you don’t understand the risks involved.

One of the best ways to prevent big losses is by using stop-losses and take-profit orders. These are orders you place on your trading platform that automatically exit a position when the price reaches a certain point.

Think of such orders as an insurance policy.

Key points

If you remember anything from this article, make sure it’s these key points:

You can make a profit if your wins are higher than your losses . 50-55% is successful and sustainable for most traders.

Strategising is how you make your money trading forex . Don’t start trading without a plan and an idea of how to make money in different scenarios.

Risk management can stop you from losing everything . With every trade, you should know how much you are willing to lose.

Getting an education

Wow, there cowboy! Were you just thinking of jumping right into forex trading after reading one little article? While we are flattered that we managed to convince you to get into forex trading, one article is not enough to start!

You need to educate yourself.

Before anything in this article is of any use to you, you need to know the basics.

Trading education is offering a free forex trading course, the ultimate guide to forex trading , and it is the best guide for beginners to make money trading forex , as well as professionals.

With our course you will learn the following:

Foundation in forex trading

Mechanics of forex trading

Advanced analysis in forex

Popular trading strategies in forex

Only when you understand the above will you really be able to make money trading forex.

Our forex trading education would normally cost you £2,500, but luckily for you, our partners are paying for it instead.

What is forex and how to make money with it?

Currency or forex trading has received a lot of attentions in the past few years.

However, let’s see whether it is what people really think, or it is something completely different.

What is forex?

Forex is the knowledge and art of trading different currencies against each other and making profit through it.

Each country has its own currency, and the currency of different countries can be bought and sold against each other.

Forex traders are those who make money through buying and selling different currencies against each other.

Forex is not a new business, and its history is as old as the history of money.

However, computer and internet have enabled people to trade forex from home and through the personal computers.

There are two kinds of forex traders

Forex trading is different from the money exchange business.

A money exchange business also deals with the currencies.

But it is different from forex trading and forex traders are not money exchangers.

Forex traders are those who buy and sell currencies against each other to make profit.

They don’t to offer a money exchange service to people.

1) retail forex traders:

Retail forex traders are the ones who trade forex from home and through the retail brokers.

They are the ones who lose a lot of money and give up on forex trading sooner than later.

Most people think that it is possible to have a fixed monthly income through forex trading, and so they start doing it from home.

However, forex trading looks easy at the beginning and when you look at the price charts.

Indeed, there is no retail forex trader who can make money consistently from trading the currencies from home and through the retail brokers.

It is becoming harder and harder to make money through forex trading and as a retail forex trader.

Brokers get greedier all the time and try to cheat their clients more.

Indeed, I have never seen a consistently profitable retail FX trader who trade currencies through the retail brokers.

By the way, I forgot to tell you who forex brokers are.

They are the companies that connect you to the currency market to enable you to buy and sell currencies through your personal computer and the internet.

2) professional forex traders

Professional forex traders are the ones who either trade for the banks or the hedge funds and financial companies, or if they trade for their own, they do it through the bank accounts and with a reasonably big capital, not through the retail forex brokers and with a small trading account.

They don’t trade every day, because they only take the big trading opportunities to increase their wealth and capital.

Indeed, currency trading is not a source of income for them.

It is an investment opportunity to increase their wealth.

Learn more about these forex traders:

So, the first thing you have to keep in mind is that forex is not what the brokers and forex signal websites advertise over the internet.

Therefore, make sure not to waste your time and money on it, with the hope of creating a source of income that makes money for you every month, consistently.

It doesn’t work like that at all.

Forex trading can’t be as your main source of income and full-time job. Period.

If you don’t believe this, you will be back to this article and this website after a while of wasting time and money.

So make sure to bookmark this page to come back here when you remember me and this article after losing some money and wasting a lot of time.

I hope you don’t rick too much.

How can you make money with forex?

Does what I explained above mean that you can never make any money through forex and currency trading?

Indeed, currency and stock markets are great investment opportunities.

But please note that they are investment opportunities, not sources of income.

It means, you can invest a portion of your capital in currency market to increase your capital, as you do the same with the real estate and stock markets.

To do that, first you have to have a reasonable amount of capital that you can invest a portion of it in the currency market to increase your wealth and capital.

This is how forex trading and currency market can benefit you.

Day trading with shorter time-frames

If someone tells you that he makes money every day while sitting at the computer and trading the currencies against each other through the shorter time-frames, then you should make sure to ignore him, because he is lying.

Now, as I mentioned above, forex is a good investment opportunity that enables you to invest some money and increase your wealth and capital.

What if you don’t have any money to do this now?

If you don’t have any money and capital to invest in the forex market, then you have to create a reliable and strong source of income to make money consistently.

Forex can’t be this source of income at all.

Therefore, if you are unemployed and you have no job and income, or you have a job, but your income is not enough and you want to make more money, and you think that forex trading is the solution, you are wrong.

I explained about the reasons above.

The first step

What you have to do first, is creating a reliable and strong source of income.

When you made enough money, you can invest a portion of it in the currency, stock and real estate markets to make more money and increase your capital.

If you aren’t ready to do that now, then stay away from the forex market, because you can’t make any money through it with a small $500, $1000 or even $10,000 account with a retail forex broker.

This is the most important piece of advice we always give to our website’s followers.

Now, if you are ready to start from the beginning and establish a reliable and strong source of income, I suggest you to read the below articles to understand what I mean by a reliable and strong source of income:

The below article explains how our investments strategy works.

If followed properly, it can make a lot of profit in long-term in the forex market.

This is the strategy you have to follow when you have already earned enough money through the reliable and strong source of income I talked about it above: A short term investment strategy that makes you a millionaire

Don’t trust the fund and account managers

There are some people who claim to be skillful and profitable forex traders.

They offer you to give them some money to trade in the currency market and return some profit or interest to you every month.

These are the ones you should avoid as well.

The ones who are not scams, don’t know what forex trading is in long-term.

They have been lucky to make some profit for a short while.

Therefore, now they think they are professional forex traders who can double and triple the accounts every month.

What will happen is that they will wipe out the whole account and all the money will be blown up.

So, if you are looking for making money through forex, make sure not to give your hard-earned money to anybody.

Also you don’t risk your money to trade forex on your own.

For newbie forex traders

For a newbie, forex and currency market is nothing but a money sucker.

It only wastes your time and money. That is it.

Now, if you are really after making money and getting rich, you can follow a clear and straight-forward wealth building strategy: A wealth building strategy to create wealth from nothing

Forex market can make you richer only when you are already rich.

Now you know what forex is and how professional forex traders make money

Therefore, you won’t make any mistakes and you won’t lose any money in this market.

You are lucky if you have found this article before risking any money in forex trading.

I know some people who haven’t been as lucky as you.

They lost their shirts before they learn that forex trading was not what they thought.

Make sure you follow us on this site, if you are serious about getting rich without losing any money and wasting any time.

In this below 23 minutes video, we have talked about the history of trading at the beginning. Then we have explained about the currency trading basics. This video covers the below topics:

The currency market and the world of exchange

The modern exchange

The modern stock exchange

The history of stock exchanges

What is liquidity?

Rating of quality

The agreed minimum quantity which can be traded which is “LOT” in currency trading.

Different kinds of exchange: commodity, stock, currency

International transactions: US dollar, euro, british pound, japanese yen, swiss franc

What is “foreign exchange”?

Who works on the currency markets? Central banks of countries, financial companies and brokerage houses, private individuals like forex traders

The markets working days and times

Currency pairs

Point or pip

Margin and leverage

Trading platforms

Bid and ask prices

Spread

Long and short positions

Stop loss and target (take profit) orders

How do you make money through forex trading?

You buy or sell a currency against another one when you come to this conclusion that their value is going to change against each other and consequently your trade will make profit for you.

For example when you buy EUR against USD, it is because you think that the EUR’s value is going to go up against USD after a while.

Therefore, (1) you pay USD to buy EUR and then (2) you hold the EUR you have bought for a while (3) to wait for the EUR’s value to go up against USD. Then (4) you sell the EUR you have bought to collect the profit you have made.

For example, you buy €100,000 against USD when the EUR to USD rate is 1.0590. Therefore, you have to pay $105,900 to buy €100,000:

You expect the EUR’s value to go up against USD and you are fortunate enough to see that it really goes up after a while and let’s say it reaches 1.0690. Therefore, you decide to sell the EUR you have bought to collect your profit. As the rate is now 1.0690, you will receive $106,900 when you sell the €100,000 you had bought:

Therefore, you have made a $1,000 profit:

It can be the other way round if EUR’s value goes down instead of going up. For example, if it goes down and reaches 1.0490, and then you sell the EUR you have bought, you will lose $1,000 because you have paid $105,900 to buy €100,000 while the EUR to USD rate was 1.0590. Now it is depreciated to 1.0490, and so, you will receive $104,900 if you sell your €100,000:

This is how you can make or lose money through forex trading.

How can you buy and sell currencies against each other?

1) there are some brokers who facilitate the trades for you by providing a trading platform software that can be installed on your computer, and connecting the software to currency market. They charge you some fees for each of the trades you do.

To make the work easier for, brokers pair the currencies against each other and create currency pairs.

There are a lot of things you have to learn about the brokers before you open an account with them. Many of them are not reliable and can make you lose money. So be careful.

2) you can trade the currencies against each other through a bank account as well.

Now that I have almost explained what forex is, I’d like to explain what forex is not.

What forex is not?

Some people have some wrong impressions about forex trading.

Forex is not a get-rich-quick scheme

If you become a professional forex trader who can make profit consistently, you can make a lot of money from forex trading. But you can do that only when you become a consistently profitable trader who knows a lot of things about trading and knows how to manage and limit his risks.

It takes time and effort to reach this level. You cannot start making money through forex trading overnight and just by following a friend who is also a beginner and probably has been able to make some successful trades on a demo or a small live account.

A forex trader is called a consistently profitable forex trader if he can make money consistently for several consecutive months and years. He should be able to repeat his success, not that he doubles his account through one successful trade and then keep losing money.

No doubt that even a professional trader loses money sometimes, but the difference is (1) his losses are much smaller than his gains, and (2) he can easily recover his losses. Additionally, (3) the number of his successful trades is higher than the losing ones, and he can repeat this pattern over and over for several months and years.

Keep in mind that trading can be risky and there are some people who have lost their shirt in trading. Most or all of the professional forex and stock traders, have at least one good source of income and use the trading to increase their wealth, not as their main source of income. Indeed, they force their money to make more money for them through the ways like stock or currency trading or other kinds of investments. Therefore, don’t look at forex trading as a main source of income. You have to have a good backup.

Hope I have been able to explain in brief what forex is. Keep following us on this website if you like to become a professional trader who also has some good and stable sources of income and uses the trading as a way to increase his wealth.

How does forex work?

Most of those who ask “how does forex work?”, don’t care about the technical aspect of forex trading. They want to know whether it really makes money or not.

People start learning how to trade forex, because they want to make money. Many of them want to make a living through forex trading and look for having a source of income through forex trading. They want to become full time forex traders who trade forex to make a living.

Some others look at forex trading as an investment opportunity to increase their wealth.

Now the question is whether forex really works for these people or not.

Before I answer this question, I’d like to explain a little about the technical aspect or forex trading and how forex works behind the scene.

How does forex work technically?

Forex or foreign currency exchange is the business of exchanging the currencies against each other for the purpose of making profit. This is what forex traders do. They buy and sell the currencies against each other to make profit when one currency’s value goes up or down against the other one.

Some others, offer a currency exchanging service to those who need to convert a currency to another. For example, tourists have to buy the destination country’s currency. The money exchange agency charges some fees to exchange the currencies to each other for them. You can do this through the banks too, but the private money exchange agencies are used to offer better prices: how to run and manage a money exchange business that makes money

Forex trading is not something new. Its history is as old as the history of money. But the way that retail forex traders trade currencies now, is somehow new. It is done electronically and through the internet. It is almost 100% automatic and it needs no human touch to complete the exchanging process.

To trade currencies against each other as a retail forex trader, you have to open an account with a forex broker. More professional traders, trade through the bank accounts that needs more capital. They buy and sell currencies against each other through a trading platform software, or through their online banking account.

Here, I’d like to focus on this question that how does forex work to make money for forex traders. And, how forex traders can make money with it and whether it is really possible to make money with forex or not.

How does forex work to make money for retail traders?

Theoretically, retail forex traders try to predict whether a currency’s value will go up or down against the other currencies. If they conclude that the value of currency A is going to go up against currency B, then they will buy currency A against currency B. It means they pay currency B to receive currency A.

In case they are correct and the value of currency A really and reasonably goes up against currency B after a while, they will convert currency A to currency B. The price difference makes some profit for them. This is how forex trading makes money for forex traders theoretically.

Now the question is whether this process results in profit in reality and actually or not. Can the forex traders make money consistently? Is forex trading a good and stable source of income? Does it really make money as a full time job?

There is no doubt that the currency market is a big opportunity to make money. There are so many who make a lot of money through this market.

However, to make money through currency trading, a retail trader has to have two things:

He has to master a trading strategy.

He has to have money to trade with and make more money (profit).

Mastering a trading strategy

There is no special and clear way to master a trading strategy. While it is hard and complicated for most people, some others can do it after a while of learning and practicing. I personally believe that mastering a trading strategy and then making money as a professional trader has four stages:

You have to choose a trading strategy and learn the related basics and technical parts.

You have to demo trade the trading strategy until you become a consistently profitable demo trader who makes profit on the demo account consistently and consecutively. To make sure that you have reached this level, you have to repeat your success for 6 consecutive months at least.

After becoming a consistently profitable demo trader, you have to try the same trading strategy on a small live account to make sure that you can repeat your success with real money too. To make sure that you have gained such an ability, you have to repeat your success at least for 6 consecutive months here too.

You can trade with a bigger account to make a reasonable amount of profit. If you can afford, you can even trade through a bank account that needs more capital, because banks usually don’t offer any leverage.

Nobody knows how long it takes to pass the first 3 stages and reach the stage 4. It is different from person to person. However, something which is clear is that nobody can pass these stages without spending enough time and energy. You have to spend time to become a consistently profitable demo and then live trader. You have to practice with peace of mind.

Financial freedom

Now, it is time to refer to the beginning of this article that says “people start learning how to trade forex, because they want to make money…”

Whether you like to make a living through forex trading or you want to look at it as an investment opportunity to increase your wealth, you have to be financially free while you are trying the master your trading strategy and pass the 4 stages I outlined above.

Financial freedom creates the peace of mind you need to spend enough time on learning and practicing. When you are not financially free and you have to make money as soon as possible, you will not have the peace of mind you need to focus on learning and practicing, and you push yourself to start making money as soon as possible.

Therefore, you will open a live account even before you become a consistently profitable demo trader. Then you will push yourself to make money with your live account. But, as you haven’t completed the learning stages yet, you will make a lot of mistakes, and so, you will lose money.

Most traders wipe out their live accounts at least a few times. Unfortunately, many of them start trading with the money they cannot afford to lose. Finally, they give up after wasting a lot of time and money.

You can’t make money through trading, when you HAVE TO make money. This is one of the big differences that trading has with the other money making opportunities: trading strategies don’t work if you don’t choose the right living strategy

How does forex work practically?

Therefore, we can say that making money through forex trading has two main stages:

Mastering a trading strategy

Having enough money to trade and invest

According to what I explained above, both of these stages are dependent on “money”. You have to have money to master your trading strategy. Then, you have to have enough money to open a reasonable live account. You can start with a small account, but it takes you a lot of time to turn it into a reasonably big and professional account.

Therefore, having a good and strong source of income is a must. This is how forex works. It is not only with forex. It is the same with any trading and investment opportunity, be it currencies, stocks, real estate and…

Forex trading as a full time job to make a living with

Forex or stock trading can’t be known as full time jobs that you can make a living with. They are good and strong investment and money making opportunities, but you shouldn’t look at them as full time jobs. The first and the most important reason is that making money through trading is not just dependent on you, your abilities and activities as the trader. It depends on the markets too.

Sometimes the markets become too slow for several months, and so, you can’t locate a trade setup to make money. Sometimes the markets become too volatile and cause some big losses. You need to have a good and strong source of income and a reliable backup to support your trading venture, otherwise you will be in trouble.

While forex trading is a great opportunity to make a fortune, it is not a business that you can make a living with in long term. It is the same with stock trading and real estate investment. They can help you increase your wealth and grow your capital dramatically. But it is too hard to rely on them as the main sources of income under the normal conditions.

Concluding

It is great that you are after making money through forex trading. But you should consider the facts I explained above to avoid wasting any time and money. As I explained above, having a good and strong source of income is a must for those who want to learn to make money through forex trading, and also for those who have already mastered their trading strategies.

That is why we not only teach our followers the trading techniques, but also help them to establish a good and strong source of income. This is how forex works.