Five Realistic forex trading expectations

businessman holding laptop with forex symbol


Trading the forex markets is a quick fire way of making you live the life of your dreams. This can happen because when it comes to rapid return on investment there are few other rivals, probably none. So the forex markets can make you very rich….but it can also make you lose your shirt.

For the few traders who are lucky, it is possible to start out your trading career with a series of good winning trades. But it takes more than luck to have a sustainable income in this arena, and more often than not luck will run out. What therefore should be realistic expectations of trading currencies?

I) Expect Consistent Profits Over The Long Haul

It is unrealistic to expect to make all your money all at once. Sure there will be months when you may make 10% on your investment, but what if the next month represents a 20% loss? The point is that although there will be winning months, the losing months are all a part of the game. So how then can one be profitable in this see-saw affair?

II) Prepare To Spend Time Educating Yourself

Being a successful forex trader takes some work. There is a lot of information zooming across your computer screen. Understanding what goes on during currency trading will make the difference between being an informed trader and one who is clueless. This usually translates into the longevity of your trading balance because the educated trader uses time proven and tested analysis to determine ahead of time, when and why to click the buy or sell button.

III) Learn Money Management

There are many schools of thought on the subject of managing the funds used in currency trading. Due to its high risk nature, the consensus among the more successful traders is that no more than between 1% to 5% of your account balance should be risked on any one trade. Staying within this risk range gives your trading account the power to withstand a string of unfavourable trades.

IV) Expect to be Profitable But There Are No Guarantees

Sound application of technical and fundamental analyses using a proven methodology has resulted in profitability for many a trader. Trading methodology differs according to your trading style but whether you are a scalper or long term trader success can be yours with a disciplined, consistent approach. It is however foolhardy to believe that there is a magic formula that guarantees trading success. The key point to note is that there is no such thing as 100% winning trades. Trading profitability is enhanced by the consistent use of sound money management and a proven trading plan over time.

V) You’ll Have To Devote Some Time To Your Trading

Trading places demands on your time. If you are really serious about trading then you have to be prepared to plan how and when you will trade. Active trading requires hours to be spent monitoring price movements. There are however a number of alternatives to staring at your screen for hours. You could for example trade from the daily charts, monitoring your charts only a few times per day. There are also alerts which can be sent to your mobile phone to indicate when to open or close a trade. There is also the option of managed trading accounts or trade copiers which do not require you to physically make trades.

Always remember that trading the currency markets can be a two edged sword. It can make you rich but without careful navigation it could take back what it gave to you.

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Written by Ferl Ngningone

Ferl is a former Financial Analyst at BNP Paribas and a well-seasoned globe trotter. Besides trading online he enjoys traveling more than anything.