Many traders are drawn to the foreign exchange market when they see promises of massive returns. Have you seen advertisements for systems which can double your account in a week? Or give you returns of 1000%? The people who promote these systems say that they work because with Forex you are allowed to trade using leverage — meaning you can control substantially more money than you actually have, and collect the profits from those massive trades. Of course, what these
The reality of Forex is that while leverage is available, most successful traders use it sparingly or not at all. The majority of traders who actually make it will only invest something like 2.5% to 5% of their accounts on any given trade. That is a pretty small percentage of their bankrolls. How many trades you take in a given week or month and how successful those trades are will determine how much money you can actually make in a given time period. Most really good currency traders are pleased if they can pull in 5% to 10% returns per month!
Does that mean you cannot make more than that? It does not, but you have to be careful how you go about it. You could bring in 1000% returns in a week with a lucky gamble after all — and then lose 1000% the next week and be out of the game. Would you rather make huge returns for a week or two and then go broke, or make smaller but consistent profits which will add up over a long time frame? You cannot build a living on wild speculation, but you can build a living off of consistency in FX trading.
So how can you increase your earnings without gambling? One way would be to take more trades. You cannot compromise on the integrity of those trades, however — they need to all be
Forex takes a great deal of patience, unless you are coming into it with a massive bankroll already, in which case you should be perfectly happy with 5% to 10% monthly anyway. Remember that there is theoretically an exponential growth curve if you can stick with this for the long term, but only if you can pull in consistent profits. So work on that 5% to 10%, and know that your patience and diligence are going to pay off for you in the long run. If you feel the need to accelerate things, then concentrate on funding your account — not compromising your discipline.