Every year, a fresh batch of novices discover the world of Forex trading. Many of them dive right in, believing they will get rich overnight.
Forex is not a get-rich-quick scheme, however. Anyone who tells you otherwise is trying to sell you something. They might even be trying to scam you.
The overwhelming majority of would-be Forex traders fail. Only a small percentage are still trading after several years. An even smaller percentage will go on to trade profitably over the long term.
Let's go over the reasons why Forex is not a get-rich-quick scheme. Reading through this guide will give you the understanding to protect yourself from scams and bad decisions. That way, you will have a better shot at actually becoming one of the elite traders who do bring in reliable income with Forex.
1. Every trade you make carries risk
One of the reasons why you cannot get rich quickly with Forex is because it is an inherently risky business.
Scammers who tell you that you otherwise might try to sell you trade alerts they claim cannot possibly fail. But no matter how strong a setup you have, there is always the possibility of the trade going against you.
Even genuine professional traders with excellent systems who masterfully execute their trades will tell you that Forex may be simple, but it isn't easy.
2. There are no perfect systems and never will be
You have probably seen the warning: "Past performance does not guarantee future results." This is due to what we just talked about, the risk inherent in trading.
Many traders believe if they can find a "holy grail" of trading systems, that is all they will need to get rich quick.
But there are no holy grails out there. There are systems that can yield consistent profitable results, but even they can result in losses.
Not only that, but good systems "break" on a regular basis when something changes about the market conditions. They then need troubleshooting and adjustments to get back to producing the expected returns.
3. It takes hard work to learn to trade
When you decide you want to become a Forex trader, here is what that journey will entail:
- Learning Forex basics
- Exploring various trading systems
- Finding a profitable system
- Backtesting and demo testing your system
- Creating a trading plan
- Choosing a money management strategy
- Raising money for trading
- Becoming a genuine expert in your trading system
- Picking a broker
- Going live
Every one of those steps will take time and work. A few of them are likely to take a lot of time and work, like becoming a true expert in your trading system. This step alone is one that many traders spend months or even years on.
4. You need ample capital to make large returns
Another reason a lot of people fail to achieve rapid success with Forex trading is due to capital constraints.
You can open a Forex account with a pretty small amount of money these days. Let's say you decide to start with $1,000.
You have decided to follow the money management strategy that many professionals do, and only risk 2% of your total trading account on each of your trades.
2% of $1,000 is just $20.
Now let's say you are using the daily charts, which is also common for beginners. Your typical trade lasts several hours to several days. Your trading strategy might generate a high win ratio, but only 1-2 trades a week.
You discover that you are placing about 6 trades a month on average, and are winning 5. You are netting around $100 a month in profits.
As your account grows, so will the amount you can risk, and so will your profits, but it will happen pretty gradually at this rate.
Even if you are doing everything right, it could take years before you are bringing in the kind of returns you need to do something like quit your day job. That brings us to the next point.
5. You will likely be juggling trading and a day job
The majority of people who want to get rich trading Forex are hoping to unchain themselves from their 9-5 jobs, or avoid having to have one altogether.
Chances are good, however, that you will be juggling Forex and a day job for years. That limits the amount of time and energy you will have to spend on your trading.
Not surprisingly, some traders decide to quit their day jobs, thinking that by doing so, they are making a commitment and speeding up their journeys.
That is a mistake, however, because the chances you will successfully learn to trade rapidly enough to start doing it for a living before you run out of money are low.
Even though juggling a day job with your trading can make it take a while to become successful, ultimately, it will probably get you to your goal sooner.
Your day job will help you to sustain yourself and keep adding money to your trading account, instead of having to remove it.
A warning about beginner's luck
Scammers claiming Forex is a get rich quick scheme are one of the reasons many traders believe that it is. But another is the experience of beginner's luck.
Here is how beginner's luck tends to unfold. Imagine this scenario. You are in the process of learning how to trade as a complete newbie. You find a trading method that appeals to you, and you test that method. You get great results. You then begin trading live with real money. You continue to get great results.
So far, so good, right? Trading may seem easy to you at this point. You find yourself wondering why so many people keep telling you it isn't. It is easy to imagine getting rich quickly if your progress continues at this rate.
But then one day, you find yourself losing. You shrug it off at first, thinking it is just a hiccup. But then you keep losing, and losing, and losing. You have no idea why this is happening. You are doing everything the same way you were before. Why aren't you profitable?
The answer is simply that you didn't know what you were doing nearly as well as you thought. You were experiencing a streak of beginner's luck, and now that streak has come to an end.
This is when a lot of new traders get a harsh reality check. They realize that they are actually still months or even years away from the point where they can consistently profit.
It can be very discouraging to think you are on the fast track to riches, only to discover that you don't know what you are doing. Some traders even get so discouraged they give up. That is why you may hear sometimes that beginner's luck is one of the worst things that can happen to you as a newbie.
But if you have realistic expectations, and you are aware that Forex is not a get-rich-quick scheme, you are less likely to quit when beginner's luck comes to an end.
You will buckle down, figure out what went wrong, and work toward building the deeper understanding and skills you need to be successful over the long term.
This might involve getting better at recognizing setups, fine-tuning your grasp of market context, or switching methods altogether. In some cases, it could also involve improving your money management or your trading psychology. Every scenario is different.
You can succeed with Forex trading, but it takes time
Some people do get rich trading Forex. But they are a tiny fraction of all traders, and they don't do it overnight.
If you want to trade Forex successfully, you need the perseverance to stick with it for the long haul. It is best to mentally prepare yourself for a journey that will take months or years.
Here are some tips to help you keep the process moving forward:
- Don't try to rush yourself. Attempting to take shortcuts is exactly what causes so many traders to fail.
- Keep your day job. In the long run, it will help you grow your account more quickly, even though it will take up a lot of your time.
- Set realistic, achievable, incremental goals. Do not try to set time limits for success.
- Ask for help when you need it. You may be surprised by just how many generous Forex traders are out there, willing to share their knowledge with a novice.
- Try to structure your learning process. You can do this through a coaching program or on your own. Regardless, it helps to have direction.
Patient traders are less likely to blow their accounts on subpar trades or get discouraged by poor results. If you keep putting in the effort, you will continue learning and growing as a trader. Hopefully one day, you will achieve your goals.
