Trading Forex: From Hobby to Profession

Filed under: Learn Forex Trading |

 

The road from trading the forex markets as a hobby to trading as a profession is a long and arduous one. If you are new to trading forex, I will tell you this from the outset – it is not easy.

 

Like many people, when I first began trading forex, I had dreams of giving up my day job in a year and getting rich beyond my wildest imagination. Needless to say, this has not happened (although I have managed to give up my day job of teaching by becoming a freelance writer!). I think there are several stages that need to be passed if one is to become a professional forex trader. The first, is just to learn to break even. This might not sound like much of an achievement – and you might think that you should break even just by putting random trades on; much like you would if you tossed a coin. But this would be wrong. The spread (which is, in effect, a small percentage of your profits taken by your broker) makes sure that you will not break even if you put on random trades. In the long term, you will carry a heavy loss. So, breaking even is an achievement to start off with.

 

The next barrier is to turn a profit – any kind of a profit, over a long series of trades. This takes a lot of skill and practice, but with perseverance, it can be done. I think most people who apply themselves properly will eventually reach this stage if they stick with it. However, the next and final stage is the toughest of all, and that is making enough money to give up you day job.

 

Realistically, you will need a considerable trading bank in order to do this. For example, if you have a trading bank of 10,000 GBP, you will need at least 100% gains in a year just to be able to survive if you give up your day job. A very tall order indeed. In reality, 30% annual gains would be very satisfactory as a trader, but in order to make a good living from this, you would need a trading bank of 100,000 GBP! So, you can see some of the financial barriers involved in becoming a professional trader. A way around this is to risk more per trade, but by risking more, you run the risk of losing all of your trading capital. So it is a precarious balancing act indeed.

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