Newbie question: If I do the hard work, will it be worth it?

Beginner Questions
1

TL;DR: Is anybody actually able to turn a consistent profit, long-term, trading FOREX?

Hello everyone. My name is Jason and I am brand-spanking new. I was going to make my post in the introductions forum, but my studying has led me towards a question I can’t wait to ask.

I have been learning about FOREX over the past few days and no matter where I look, I keep seeing phrases similar to this: “By far, the majority of retail FOREX traders lose money over the long run.”

A bit about myself: I am a teacher with no background whatsoever in financial markets. That being said, I am also intelligent (I suppose that’s debatable :13:), disciplined, and good with math/numbers. I became initially interested in FOREX trading as way to potentially add a few hundred dollars or more a month to my income to help me pay off crushing student loans, and perhaps be able to afford to have a kid. I do not expect to become the Wolf of Wall Street.

I am looking at FOREX from this perspective: I used to be a very good poker player until life and geography made playing difficult. My initial understanding of FOREX is that it is a lot like poker. You only get good through meticulous study and practice. One you get enough to be profitable, it takes countless hours of grinding and continuing education to maintain and build those profits.

In general, to be profitable in poker, you have to have a winning strategy and stick to it. You will take some bad beats, but if you are disciplined and your strategy is sound, you should come out profitable in the long run.

This is the mindset I want to approach FOREX with; HOWEVER, with the consistent loud disclaimers everywhere I look saying that most speculators lose in the market, my enthusiasm has been somewhat tamped down.

I want to emphasize that I’m willing to do the years of study/practice necessary to hone this hobby/craft/whatever it becomes before I throw my hard-earned teacher money into the market.

Okay, so here’s my question: If I do the work to study this, is it unreasonable of me to expect I can make a profit in this over the long run?

3

H jpayne and welcome to BP.
Its true that the vast majority of new fx traders lose, and while we can only speculate as to why, it would seem from what we can read here and elsewhere that there are a number of factors that keep popping up;
Lack of any forex education/understanding
Lack of due diligence when choosing a broker
Greed- manifesting as over-trading, extreme risk, over confidence
Laziness- looking for shortcuts, holy grails, etc
Being scammed and wasting their money on useless training courses

Although avoiding these is still no guarantee of success, at least it will eliminate a number of possibilities and give you a fighting chance of succeeding long term

Good luck

4

Hi there,

This question isn’t very new. I’ve had the same question and looked through the posts to find a suitably satisfying answer. Sorry, but I didn’t find anyone willing to say,“Yeah dude! I make $5000 a day, check out my Ferrari pictures!” It seems that people that do make big money tend to keep quiet? (my guess) But it led me to research further. I’m also a newbie, but learning fast.

I do have friends that have mentioned they “know a trader at gym who earns” big bucks and drives fancy cars etc. But I started reading books by traders and I can say, yes I do believe there are consistent profiteers, but imagine you’ve just won the lotto, everyone starts asking you for a loan and you get loads of new friends. That’s my take on why you don’t hear about them boasting too much.

In my life I have always asked the people who are successful in their lives how they did it, or read books by successful people or at least read books by people who asked successful people and then wrote the book. So with forex I have started reading books also. Another source is the big traders or institutions. I mean there are trillions being traded everyday, if City Bank wasn’t making a profit at forex trading they’d stop right? So yes, a lot of the big banks make consistent profits (my guess, not numerically researched or proven… hey we could have another banking melt down, who knows?).

What I can say from my research is that the guys who consistently make profits (and big ones) are the guys who generally follow the trend and trade longer term, ie; forget about scalping. Since I started following monthly and weekly trends my trading has improved immensely (and consistently in profit). This also seems to fit in your introduction about how you intend to trade, plus it gives you time to work at school and place trades in the evening (or morning) when you get home. Imagine just trading the Moving average crossovers on Weekly graphs? Look at the EURUSD wekly 55 day MA, there are only 3 or 4 trades, but a couple of immensely profitable ones. Though with big long term trades comes big stop losses and therefore essential money and risk management.

Another [B]Big Player[/B] to follow comes from the actions of big traders in the Chicago Mercantile Exchange, this is where the like of George Soros and Warren Buffet might use futures, and they are big money men… who make consistent profits. So it’s worth while following these. This section about the Commitment of traders report is covered in the School tab in the market Sentiment section of the Undergraduate section.

So to summarise, yes, I believe there are traders making a consistent profit year after year, it appears that longer term trend following traders are the key to profits. Therefore no, it is not unreasonable to expect to make a profit over the long run. You are a teacher, so you know that if you teach a pupil and the pupil learns and applies themselves they will likely be successful. Yes many people do loose money, but I found a report somewhere where brokerages had to disclose how many traders where making money, they reported around 20 to 30% where in profit. Learn, learn, read, read and demo trade until yo make consistent profits. Oh, and as a final, even as a newbie I am now making consistent profits, but I haven’t traded more than a year (in forex), so its early days for me.

Good luck, if you listen to successful people and practice their example you are more likely to make money here, so read forex books written by successful forex or derivatives traders.

5

First of all, welcome to the forum! I hope it will be of great help to you on your trading journey!
Regarding your question - yes, there are people who make a consistent profit over a long period of time. Those traders, however, are few and far between. It takes a lot of effort, sweat and often tears to get to that point, and it’s not guaranteed you’ll get to that point. Some people try for years and it still doesn’t work out. I am not saying these things in an attempt to discourage you, but I think it’s important to go into this with your eyes wide open. This will not be an easy or short journey but if you are stubborn in your efforts to learn you will likely gradually become able to profit off trading.

6

Thanks for the info everyone. What everyone has said so far is really encouraging.

I’m about halfway through middle school now. I’m going slow and making sure I comprehend what I’m reading. I already know now that once I finish the school I’m going to have to read through it again. I’m averaging missing about 1 question on every quiz…so I"m not quite getting everything. I don’t think I’m capable of learning stuff as fast I did about 10 years ago, so I’m approaching learning trading the same way I hope to approach trading…with patience. I have to be honest; the learning curve from knowing NOTHING about trading to trying to understand it to a degree where you have any confidence whatsoever that you won’t blow your account on your very first trade is MUCH steeper than I anticipated. That fact has not been discouraging, just…sobering.

The info Quadricolor supplice about the Chicago Mercantile Exchange is interesting. I’ll have to read up on that more when I’m ready.

I opened an OANDA demo account a few days ago. I haven’t done a thing on it. Literally the only I truly comprehend on the screen is the candlestick chart. I have questions about literally everything else. Going slow…going slow.

7

Yes, it’s not a secret that the majority of traders lose. On the other hand, if there was no money to be earned in Forex, there wouldn’t be a daily traded volume of approximately $5 trillion :wink:

8

Words of wisdom! We as traders have to always work on minimizing our losses by keeping in mind many such factors. For a newbie trader following a disciplined strategy and keeping control on emotions can also help him stay longer in the Forex game.

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If you’re truly willing to invest the time and effort lets link up.

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Hello Jason, I really appreciate your learning concentration, just keep it up! There is no way to entirely eliminate risk in Forex trading without learning, so you are on the right track! But please note, there is no guarantee of success! I personally know many traders who have long time trading experience and they tried a lot to learn Forex, but unfortunately till now they are struggling!

11

Yes, Forex trading has a bad reputation as most people consider it as way to get easy money, so they lose their deposit and say, that Forex is a scam. Lots of people lose money on Forex. But ones, who realise, that it is a hard work, gain.
You should learn all the time, be up-to-date, be aware of world news and be able to analyse and predict price changes. If dont realise it, youll keep on losing money. And also, choose broker carefully, its important. But if you ready to accept it, youre welcome!

12

The hardest easy money you’ll ever see.
It has to become an obsession, like those poker players you mentioned. They are filling out spreadsheets all the time, they can’t wait to enter their results into a spreadsheet and start analyzing it.
It’s hard work and obviously if you can do it you are earning money.

13

This is all good information. I want to thank all of you.

I also wanted to give you a little bit of information on my progress. I have attempted to read to the point of truly understanding through the BabyPips school. I have made it halfway through the high school curriculum…and then I ran into a problem.

I realized I was no longer understanding the material as well as I was at the beginning. My brain had absorbed so much, and I was no longer able to keep everything straight. In the HS curriculum there is a lot of info that refers to earlier curriculum, and I discovered I could no longer absorb the new information without going back and reviewing all the other stuff. It became frustrating and my quiz grades started to dip.

So, I’m rebooting a bit. I went out a bought a couple composition books to take notes in. I’m starting over in the BabyPips school. Going to make a dedicated page for each of the indicator/analysis tools and fill them out as I progress through the school. Once that’s done, I’m going to transfer them into a new notebook, separating them out by whether they are meant to identify trends or predict trends. I don’t think I can learn anymore without writing something down.

There is a lot to learn. It is not like getting a PhD. or something, but it’s not as easy as sitting down for an afternoon and figuring it all out either. Now that I at least have some idea of the depth of the pool I am diving in to, I think I have a better idea of what I need to do to understand the material. I am excited to get through all this and the ask the question: What’s next? (But I’m not ready for that yet.)

14

Really Forex is too much tough for the traders who are in particularly newbie. So, obviously a new trader should work hard to achieve the market easily. they should make a best strategy for themselves . they should spend most of their time in analyzing Forex market because it will increase their knowledge of analysis. They also should practice much on demo account to make their trading easy. Then they should choose a right and reputed broker for them .

15

It seems to me, that you are very responsible, it`s good. I think, you have a potential to To succeed in trading. Just take a break and let the all infirmation just to be in your head. Sometimes, it takes time to understand something difficult.

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Just keep on learning and practising, you are really purposeful. Dont hurry, and stop for rest, if you need it. With the lapse of time, youll form a coherent picture of everything you`ve learned.

17

Practice will work for you . As much you are concerned with trading you will do efforts to know market , try to do good analysis and reach the right entry point. It is the thing that will bring profit to you . Hard work with best knowledge really works. And it is the key to success.

18

I think years of hard work, dedication and persistence is the key to being successful at anything.

Best of luck to you

19

Actually, it is just like getting a PhD. Like you seem to aware of . . . Years of study and practical application.

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95% of traders lose money. One could spend years studying and practicing and still not succeed. I am not saying that’s for certain, but it does happen, unfortunately.