Hope you are well and safe during this difficult time, many of you have replied to my other posts and I am thankful for your time, just a brief about myself, I am a chartered accountant working in a small firm, my aim is not to get rich quick but to create multiple income streams in next 5-6 years so I don’t have to work for someone and also I don’t much like what I do now, to be honest. I need some independence, I am just ready to start baby pips, already went through the market wizard audiobook.
I was following many threads here, and I am discouraged now with some replied to beginners posts, I want to make sure if what I am planning to do is even possible as I have no time to waste at 35, I am sorry if some of my questions below seem stupid.
1- Is it even possible to live on forex trading and at some point and leave a job to rely on it? I am happy to wait for 5 years.
2- Why not we consider forex trading as other business? since I am an accountant I have seen many businesses failing, so it can be any business? I have seen some discouragement here on some posts where professionals want to switch careers to trading and many pros advised otherwise.
3- If I study and do demo accounts before going live, discipline my self and learn from my mistake, is it possible to be a successful trader in a few year’s time? and if chances are very slim then why should I?
4- I am not denying that one needs a substantial amount of capital to earn decent money, but few suggesting here that even earning 2% a month is very hard and only a few managed to do it, but I am happy if I spend 2-3 hours daily and earn even 20% a year, is it even possible?
5- Working with 9-5 I believe swing trading will best suit me? also in the long run when I have planned to leave my job, I don’t want to only rely on Forex then but also planning to have some other part-time income streams, which means I will be able to spend 2-3 hours daily.
6- If you think trading is that difficult and one should not do it or it is very risky and one cannot rely on it as a full-time income, then why you do it?
Sorry for the long post, I am very stressed about my future, I just don’t want to do what I am doing in 10 years, and I cannot think of any other online business other than trading forex, in a nutshell, I am happy to put my time in education and training via demo and couple of hours daily for next few years if I can manage to earn around 2%/ month of capital after 5 years by spending a couple of hours daily, is it even possible? if not then I believe I should think of something else.
If you are not that passionate about this market, I would suggest you to not get into it. Your qustions show that you don’t have that much interest in forex, that zeal is somewhere missing, isn’t it?
Or just explore the market a lil, give yourself some time, may be research, demo trade and then decide if you should go forward with it or not.
I don’t believe we do everything in life out of passion, if Forex is helping me achieve what I want ( as mentioned ) then I will love forex, I am not at that age where I can follow my passion, I always wanted to be a fighter pilot which was my passion and obviously not possible now.
however, yes I do have an interest in forex that’s why I want to do it, as I mentioned I want to add reasonable constant income doing something online, I did not choose to make videos on youtube as I have no passion either interest, so yes interest is also required, but passion comes with time and result.
I don’t have a passion for accounting, but I do my work very well and I am well respected among my colleagues and boss.
Hello @Chullbulla. I am probably one of those that you would consider a negative attitude on this topic but I would prefer to call it realism rather than pessimism. But I will give you my thoughts on this issue, anyway!
Firstly, your questions are not stupid. In fact, quite the opposite! These are precisely the kind of issues that anyone thinking of starting a trading business should consider.
I know it is a well-worn story but it is true that most traders do lose their money. Many regulatory bodies require that brokers state on their web sites what percentage of their clients are losers. And you will commonly see statements like this one: " CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money."
That is a big number and one reason why any serious trader will warn you to think very carefully before trying to earn a living from forex trading.
But it is also true that most of those losing money are not losing it because of market complexity, but because of their own lack of ability/education, lack of control over their emotions, a lack of understanding of risk assessment and money management, and a lack of sufficient capital which forces them to use an excessively high rate of leverage which creates a dangerous level of risk exposure.
But no point in talking about that more here because there are many threads on BP dedicated to why people lose money if you want to explore that further.
But you are a sensible person with the right approach and a useful knowledge of finance and business risk management.
My answer is that yes it is possible and some traders do succeed in that. But I do not think it is advisable. I think the biggest problem is that living from forex trading profits alone automatically creates a lot of pressure to perform consistently and frequently and produce concrete withdrawable funds on a regular basis without reducing your trading equity. This also means having sufficient capital to smooth out the bumps along the way and to support your living requirements during possible “dry” periods.
All traders will talk about dry periods when things simply just keep going wrong and that is a big stress factor as well as a drain on capital. One problem here is that whatever trading strategy we use it is designed to suit a particular type of trading such as ranging markets, trends, scalping and so on. But markets are not consistent and will go through periods of stagnation as well as strong trending. This means our strategies will perform in varying degrees of success as markets change. This is not a problem generally but can be if one is relying on regular profits to pay the bills.
Another big factor is one’s life style. A young single person will not have the same pressures as a family person with young children and a big house loan, for example.
Trading should indeed be treated as a business like any other but, on the other hand, it is a very different kind of business. Our product, ultimately, is just probabilities. No one knows with any certainty where market prices will go next and all we do is try to create an edge for ourselves so that our probability of success is higher than the probability of failure and that the losses from the failures are less than the gains from the successes - and that is about it!
But the bottom line here is that as a trader you are only as good as your last trade. You never know what the next one will be. It is sometimes described as driving forwards with only the rear mirror to guide you. All businesses carry risk but trading carries more uncertainties and variations than most other businesses.
Yes, I would say so. You have a big head start because you have already identified some of the potholes that lie ahead and know what you need to do to get around them. A demo account should be used for all your experimenting in developing what you want to trade and how you are going to trade it. And then still use it trade the polished strategy until you are confident that it can function consistently over a period of time. But a live account is still very different to a demo account and brings all kinds of psychological and emotional pressures to the table. It is very different seeing your own money on the screen…and even more different if you are relying on that money to live on!
This is a difficult and in many ways misleading issue. For starters, 2% of what exactly? I mean, if you and I do precisely the same trades with identical results but you have a $50000 account and I have a $25000 account, who is earning the biggest percentage?
What you can earn per month is directly a function of the risk exposure that you take. The bigger the target, the bigger the risks taken. And, of course, risk works in both directions. So it is not only a question of whether one can earn 20% annually, it is also a question of can I avoid losing 20% annually. The greater the target the better the strategy has to be to achieve it. But, again, the best way to determine this for you is to see what you can do with your demo account. That will open up this question for you personally.
I think it is by far the best solution to also have an alternative source of income, ideally something that at least pays the essential bills. That not only relieves a lot of pressures, but also carries you through periods of slack markets, possible illnesses, holidays, etc. Also, trading is a speculative business and it is always exposed to changes in regulations which may limit or even prohibit trading at some time in the future.
There are two different approaches to this. Either one can go for full-time trading for a living or one can use it as a means of building capital, e.g. as a pension supplement. The former has all the pressures of performance and the need for cash regularly and routinely. This can turn your focus towards trading for money instead of picking quality set ups and trading short term to bring in hard cash. The latter, on the other hand, is more relaxed and frees one to sit on hands when no set ups are good and allows one to hold on to trades longer without needing to close out to buy next week’s dinners!
It is interesting to ponder why is it that so many wannabe traders fail and lose their money and yet millions of financially ignorant people put money into shares and just keep seeing their portfolio values rising without even needing to monitor them!
You’re welcome @Chullbulla. But let me emphasise that i am only referring here specifically to trading full-time for a living. I would not hesitate to recommend trading forex alongside a normal job if one has the ability, commitment and capital to do so.
Money is the blood that courses round the arteries of all the world’s economies. Trading forex, indices, and/or commodities keeps you in touch with all the fascinating changes going on in our world as well as providing a challenge that stimulates the brain and develops our skills and knowledge in a whole range of topics.
The only negativity comes from the stress that losing can cause if one is risking too much of one’s capital or relying too much on the results to support one’s living.
So i would say just give it a go. Set up your demo, learn, put a limited amount into a live account and give it all you’ve got. But only alongside your normal everyday life. If it fails, you have not lost anything but the cost of a trial or an interesting hobby. But if it works then you can even one day maybe revisit your original question here!
These negative emotions are quite obvious as this market is full of uncertainties. But as you are saying that you are dedicated, then you have to understand that losses are part of a trader’s life. You will not have profits on all the trades. Keep this point in mind and go ahead.
Forex trading will get you results only if you are passionate about it. You will have to work hard and make decisions every now and then in the market. And this can be achieved only when you stay disciplined and focus on your goals.
