How To Make Money From Forex Trading
For many people forex trading may be something small they do on the side, and do not take really seriously but for some trading can become their main source of income, or at least a big part of it, and that is when Forex trading can become a Forex Business.
Like any other business you need to calculate and manage your costs. In Forex the costs are the losses you are likely to suffer through your treads, the commission you will pay to the broker through the spread – or separately – you basic equipment which is a computer and internet access.
Losing trades may seem like an cost you can avoid but they are not, no matter how good of a trader you are and how much money you are making, you are always going to have some losing trades, and it will be your biggest cost as a trader. So your plan should be to make sure your revenue can offset your cost enough for you to make a profit.
You need to always make sure that over all you have successful trades making enough profits to cover the losing ones, over all costs and leave a profit, otherwise it is completely useless to trade, and you will be spending more than you are making.
You can do that by making goals for your forex trading journey and always aim at reaching them. You goals should be to reach a very high percentage of winnings opposed to the percentage of losing or the winning trades need to be larger than your losing trades to balance it off. This is what is referred to as the risk reward ration.
For example your risk reward ration can be set at 1:2 for every trade, meaning 35 to 40 percent of the times you trade have to right. Most successful traders win between 40-60% of the time however their wins are substantially bigger than their losses and therefore make up for the imbalance.
So in essence you can be wrong more than you are right and still make a big profit. It takes a lot more skills and tactics to have a Forex business of course, and you cannot find out about all of them through one article but over time you can learn to manage your trading well enough to make a good business out of it.