Earnings from the stock market are mainly dependent on a product’s demand in that particular sector and its competition in the market. No doubt chances of returns are high, but these two factors play a vital role. Stocks of power sector will require more investment while a less competitive stock is too risky. Foreign exchange is even riskier. A country’s economy plays the deciding factor, and almost anything can shift the currency market. Thus, if you have heard that “making profits in forex not easy,” they are only partly true.
Most banks invest almost 20% of their annual profits in this market and generate almost up to 60% of the return. More than 50% of 43 million traders ended their trade in profit during the second quarter of 2014 to the first quarter of 2015. Plainly speaking, the more volatile the market is, the better are the chances of making a profit.
How do traders make millions in forex? They have to start somewhere. Apart from getting the technicalities right, they follow a few guidelines as gospels throughout their trading career and stick to it no matter what.
- Treat trading as a business.
In other words, take profit-making as a long time goal rather than thinking short-term. You may have to make a streak of consecutive losses in order to make that one huge profit. Take every loss-making process as a valuable experience in trading and try improvising on that. ‘Make profit in forex’ will not happen in a day and will take time.
- Copy a profitable trading signal.
You may not be sure how to place timely orders in the first few months. There are traders online who sell their profitable trading signals and allow you to copy it into your account. This will do two things. First, it will let you earn profit in forex, and second, lets you learn where to put in your orders.
- Use protective stop loss in your account.
This restricts your losses to a particular limit. Say, you bought Euros at 1.38 and set stop loss at 1.35. Sell order will be automatically placed when market quote hits that value. You are then free from any emotional temptations to wait for the market to rise again and your loss is limited to 300 pips. Traders do make millions in forex with this concept.
- Use modest leverage margins.
Till date, traders get attracted to the leverage concept and tend to invest small. Trading with a huge lot size magnifies both profit and loss by that similar amount. It is suggested that even your broker allows a leverage of 500:1, always opts for 10:1 or a maximum of 50:1. Make forex trading easy by reducing the chances of incurring huge losses.
Even, the most veteran traders with years of trading experience follow these basic principles. They wait for that one huge profit and do not care about the losses they make in the process. They do copy signals and go for moderate leverage. Definitely, “making profits in forex not easy” goes around the newbie circle quite a lot, but with accurate approach, profits can be as high as 25% in fewer than two days.