How do Successful Traders Make Money Trading Forex?
The worldwide forex market is the largest traded financial market in terms of daily trading volume, liquidity and overall value, regularly trading more than 25X the value of all of the US equities markets on a daily basis.
The forex market has 24 hours, 5 ½ days a week availability to retail traders, and its participants are mostly financial institutions; including retail banks, multinational corporations, investment fund managers, investment institutions, commercial and central banks.
Most forex trading is conducted in major global financial hubs, including Hong Kong, the United States, Singapore, the United Kingdom and Japan. Australia may be a small hub in the scheme of things, but it is vital to keep the market moving at times when the rest of the world is asleep.
Retail forex trading accounts, such as you and me, for approximately 5.5% of the global forex market.
That’s around $375 Billion per day!
What is the Average Percentage of Success in Forex Trading?
The forex market has periods of extreme volatility and inexperienced traders who don’t understand the nature of the market, the cycles it operates in and the challenges of trading a complex market with leverage, can potentially lose substantial sums of money.
Recent global studies of traders have shown that whilst only 2% to 3% of retail traders trading any market are consistently profitable, on average 14% to 15% of retail forex traders succeed when investing in the forex market.
Looking at this on a local scale, whilst around 2.9% of Australians trade on the Markets (shares, options, CFDs, minerals etc.) less than 1% of Australians Trade Forex. This means that there is a much stronger potential for profitability for those Australians who consider the forex market, with guidance, education and support.
It’s true that Forex can be a challenging market to trade, but the rewards are there for those who follow a set of principles and approach forex trading as the profitable business it is.
Some of the factors that contribute to lack of forex trading profit include:
- The lack of a realistic plan to grow their forex trading investment strategically and realistically,
- The lack of research or knowledge on how the forex market works and where the profit is,
- No clear vision of the results they want to produce and lack of clarity and motivation to “do the hard yards”
- The lack of valid trading method, edge or strategy that is designed to consistently lock in profit.
Below we look at some key elements that most unprofitable traders are missing and how to start building a solid plan for your forex trading success.
Realistic trading business plan to grow income
One of the things that unprofitable traders are missing is failing to have a trading and growth income plan to lock in profits, develop a consistent trading income and then leverage their profits and grow their investment to make more profit with lower risk.
Planning how to make and manage your trades is important in building your success.
A trading plan on how to grow your trading business and income from the very start should be your guide throughout the process and a pathway to follow in everything you do.
A trading plan helps a forex trader and investor identify and evaluate the global forex trading market in relation to their particular trading style, trading goals and the outcomes they produce on a trade by trade basis, building into trading career.
A realistic plan to grow your income should include your risk strategy to minimise loss and maximise profit, long term, medium term and short term lifestyle goals and individual trade management.
You can take the time and effort to develop your own comprehensive trading plan. Often it is a better proposition to find a comprehensive strategy and plan that already works, has proven to be consistently profitable, has been used by many traders with goals and styles similar to you to consistently make profit already.
Why reinvent the wheel when you can use a trading plan that has already been proven to work.
This is the same concept that makes franchise businesses some of the most successful retail businesses across the world.
Find a system that works to produce the consistent profit you want, with the support and guidance of successful people and use it to make yourself successful…
It’s important to create a set of realistic objectives in your plan or strategy and stick to it.
Whilst making a million dollars from you very first trade would be wonderful, the truth is it’s unrealistic and the way that most successful traders build their wealth is one trade at a time, over time, gradually improving their skills and learning from their many mistakes.
A detailed and realistic plan will ultimately help you grow your income and investment in the forex market.
A Clear Picture of WHY they want to be “Successful”
Traders looking to be consistently profitable should have a clear set of goals and a very clear picture of why they want to be successful forex traders.
Having clear objectives and goals will help you find direction and guide you through your journey trading the complex, but highly rewarding forex trading market.
You may think that money is the main motivation for most successful traders and some aggressive personality types will focus on making the most amount of money. Ultimately, these personality types result in a lonely, unfulfilled life.
Chasing money is a self-defeating process because these people will never truly have enough, so they will never be truly satisfied.
At The Trading Coach International, we focus on working with people who have the goal to be able to spend more time with their family, enjoying life, following passions and pursuits that having an income from trading they can generate in only a few hours a week would bring.
These are the most motivating goals. The ones that connect you with what you love in life and that will truly fulfil you.
Having clear goals and milestones based on reality and proven to be achievable will ensure that your trading method produces the results you’re looking to achieve and can keep you on track as you develop your skills, refocus your plans and make consistent progress to become the trader you need to be in order to have the lifestyle you want.
Whilst all traders are unique and individual and have their own strengths, challenges and ways they produce their results, starting with a solid, focused plan will give you the structure you need to gradually build in your strengths, financial goals and uniqueness to evolve your plan to support your desired financial results.
To be a profitable trader, you need to be proactive by setting clear, achievable results-focused objectives and then put these objectives into action, measure, review and readjust to grow into being a profitable and successful trader.
A Proven Profitable Trading Strategy
Successful forex traders have a proven profitable trading strategy that helps them to earn consistent profits from the large majority of their forex trades.
It’s vital to follow your valid trading strategy consistently and only make calculated and productive adjustments from time to time as the global forex market evolves and new factors affect the viability of your strategy.
An unprofitable trader who doesn’t stick to their plan or understand that the market will go through short term adjustments that sometimes just have to be ridden out, will not evolve to be successful or profitable if they keep changing their strategy midstream to another while failing to stick to or follow the specific rules of each chosen strategy.
A proven profitable trading strategy will help guide you to stick by the strategy rules to help you to determine when to enter a trade, manage it and close it to lock in the best profit.
Traders should invest their time in research and practice through a demo account to demonstrate they are capable of following the profitable strategy to earn consistent returns and make money trading forex before they trade real money.
The goal is always on the ability to consistently follow the strategy and execute trades productively.
Productive, Profitable, Proven Trading Strategies can take YEARS to develop because there are so many factors to consider. We won’t go into a lot of detail of the elements of a High Probability Trading Edge in this article, but keep an eye out for an upcoming article on this subject.
Some factors to consider are the Currency Pairs you’ll trade and how they cycle and flow, the times of day you want to trade to fit trading around your schedule, how you’ll determine a strong trade entry point, your trading targets, risk minimisation, exits, trade recording.
Your strategy should be specific and focused on the results that you want to produce and should give you every opportunity to produce these results, backed up by proof that others have done that using this Strategy.
Understand how the market works
Many traders fail to make profits and consistent income on forex because they expect that the market will be kind to them, do what they want it to, but never themselves taking the initiative to understand how the global forex market works and what factors affect the currency values and the movement of the market on a daily, weekly, monthly or yearly basis.
Learning and understanding how the market works and who drives or operates the market is crucial to a trader’s success.
Despite the majority of trading knowledge coming from experience and live trading, a forex trader should take the steps to research how the forex market works, the roles of banks and financial institutions in influencing how the forex market operates, technical analysis, fundamental analysis and how the economic and geopolitical factors impact a trader’s or investor’s preferred trading currencies.
It sounds like a lot of work and those who need the best understanding of these factors are Fundamental Analysts (hint: unless you want to spend hours leading into years trying to learn all of the factors to only find the market forces change to wipe out all your expectations, maybe Fundamental Analysis isn’t right for you)
Technical Analysis is the use of proven patterns in charts and indicators to find the areas of strength in prices and the shift in pressure in these indicators to find high probability trades.
Having a good trading strategy backed up by a solid easy to follow education plan to help you understand how to read these factors is, in our experience, the best way for virtually anyone with the commitment to follow the strategy, achieve trading success.
Learning about how the market operates is an ongoing business requirement for a trader to adapt and stay prepared in the event there are changes in the forex market regulations, conditions or changes caused by global events or occurrences.
Coaching and Support
To become a profitable and full-time forex trader, new traders have the opportunity to participate in a course to learn the fundamentals of, better still a comprehensive program like LIFT Investor Trader that not only gives all the education, but also a proven plan to follow, along with all the coaching and support they will need to build their successful profitable forex trading business.
Be careful to find the “Full Program” of education that you need.
Successful, profitable traders are educated not only in reading charts, they are also educated in business planning, risk management, dealing with the challenges of mindset in trading and building your trading business, goal setting, analysing their results objectively.
Whilst forex brokers and “gurus” offer short basic courses in some aspects of these, many times you may find them dismissing or contradicting each other, taking a trader “down a rabbit hole” that confuses, distracts and ultimately takes them away from their goals, not towards them.
Your Education plan should be focused, covering all the necessary aspects of being a profitable trader and should be cohesive – working all these factors together to help you build a solid trading business.
The challenges you may find in looking for these individual courses is that many of them are either books, or videos with little or no support in actually helping you apply the education to you personally. Very few people have the ability to instantly take on new information, skills and produce a good result just based on reading something in a book or watching a video.
Most people need the one on one support to really understand a subject, how to use a new tool, system or strategy and how THEY could actually do it.
Think back to when you were at school, college or university. The bigger the class size, the less the individual support, the less people learned.
You owe it to yourself to be supported in your education – a coach and mentor who is there to answer all of your questions, to help you review your application of knowledge and measure where you are performing, find where you can improve your skills and do this on a regular basis as you build your trading business.
LIFT Investor Trader is a comprehensive education, support and one on one coaching program, developed to help people ACHIEVE RESULTS. We don’t measure our success by the number of books we’ve sold or courses taken… we measure our success by how successful we help you become.
Profitable traders in the forex market build their success from a clear, detailed productivity and profit-focused plan for trading the forex market.
They will take their time to analyse how they can best apply their strategy, understand how the forex market works, learn the specific technical and fundamental analysis strategies to build a consistently profitable trading business, and consistently practice and develop their skills using a proven profitable trading strategy.
Successful traders are persistent and have strong support structures, a positive, realistic focused mindset. They effectively manage risk to minimise individual trade losses and build long term profit to grow the lifestyle they want.
For more trading term general definitions, visit our A to Z of Forex Trading
To look at these concepts in action, please visit our sister site, Latest Forex Rates
What to do Next
If you have more questions or need further guidance, don’t hesitate to reach out to us at The Trading Coach International for personalized coaching and support.
If you would like to learn more about trading forex profitably and what steps you can take next to get on the right track to build your Lifestyle Income From Trading, you can book an no obligation, Free Strategy Call with our Lead Trading Coach by clicking on THIS LINK
The information, strategies, techniques and approaches discussed in this article are for general information purposes only and studies of potential options. The Trading Coach International does not necessarily use, promote nor recommend any strategies discussed in this article. The information in this article may not be suitable for your personal financial circumstances and you should seek independent qualified financial advice before implementing any financial strategy. The Trading Coach International is not a financial advisor and does not have AFS registration.