Surely you have wondered before starting trading if Forex trading profitable or not, The answer is simply yes, but not all traders can make profits from Forex. You may find some of them making profits many times their capital, and others losing all their money. What is the reason? There are important criteria. If you adhere to them, you will find Forex trading profitable and you will find it very easy.
An Easy Guide to Making Trading Profitable
1 – Understanding Profitability in Forex Trading
What does profitability mean in the Forex market? If you make $10, does this mean that is forex trading profitable? The concept of profit differs from one trader to another. In order to calculate your profits well in Forex, you must calculate them as a percentage. In this way, you will discover whether your trades are making profits or not.
For example, if you deposit $1000 and make $100 in profits in the month, you have achieved 10%, and this is not a bad percentage in Forex, but in this way is Forex trading profitable for you or not? because with this $100 you will not be able to achieve what you want, and you did not start in Forex to achieve small profits, so it is better to deposit an amount greater than $1000. In this case, the 10% that you were achieving will be enough for you and your needs.
Is trading profitable in the short or long term?
This depends on the trader himself and the strategy he follows. It is possible that the trader prefers short-term trading such as day trading or scalping. In this case, he will need to open many trades in a short period in order to achieve profits through his trades.
The matter will be somewhat different in the case of opening many trades during the day or even during the week, as the psychology of the trader who opens this number of trades daily is somewhat different compared to the investor because he makes important decisions during the day and analyzes many different pairs in order to get a good opportunity to enter the trade he wants.
On the contrary, for long-term trading, such as the Swing Trader (investor), he may leave the trades open for days, weeks, and even years. This type of trader takes Forex more seriously than any other trader because they make larger deposits and open many lots in order to reap large profits at the end of the year or when the price reaches their target.
This type of investor does not mean you and me, but rather the large companies, banks, and hedge funds. They have professional analysts who analyze the market on a daily basis and open huge lots,
But in fact you can become an investor like them and I do not mean that you deposit millions of dollars but apply the same trading method that they use. You can analyze the market on large time frames such as monthly, weekly, and daily and make a decision to open your trade based on this, but you must know well that the trade will not be closed for a day, week, or even a month. You may leave it for a year if necessary, so do not rely on the profits that you may get from it, but leave it until it reaches its goal or stops the loss.
Both methods are good and will make trading profitable for you. Every trader has his preferred strategy and his method of applying this strategy. Whether it is in the short or long term, what is important is the method of applying this strategy and whether you adhere to it or not, because if you do not adhere to the strategy, you will not find Forex trading profitable at all, In this case, your calculations will be wrong because you will think that the fault is in Forex itself and not in the way you apply your trading strategy.
2 – Common Myths About Forex
Common Myths About Forex
There are myths about Forex about getting rich quickly and how to make a million dollars from $1000 in a month… etc. These are lies and have no basis in truth. The reason for these myths is the advertising methods that many advertisers use to lure people to make deposits and profit from these deposits and also to register under their IB. They do not care whether this trader will profit or not. The only thing that matters to them is profit.
If trading is that simple why did you see this ad? It would be better for the person who created this ad to trade instead of attracting more traders right? Forex is a long-term investment market, and anyone who tells you otherwise has not yet learned the truth about Forex and has not made profits from Forex in the long term.
If it is possible to make money in Forex overnight, then it is natural to find more winners than losers in Forex, right? But let me shock you, out of all traders, only 5% of traders make profits and the rest are considered losers. This is a large percentage, right?
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This large percentage may make you wonder why 95% of those who trade lose and cannot make profits in Forex. The answer revolves around several reasons.
3 – Factors that affect whether forex trading profitable or not
There are many factors that affect whether Forex trading profitable or not, and if you adhere to these factors, you will find trading profitable and very easy.
Education and knowledge
You must learn Forex well before you start trading, as learning is a very important part of your success in Forex. You will find Forex trading profitable if you take your time to learn for at least 3 months, as striving for knowledge and continuous learning always bears fruit.
What I mean by learning here is theoretical education such as educational books. In fact, there are many traders who do not prefer reading books even though they contain valuable information. Practical education such as watching educational videos and attending webinars and seminars. In this way, you will be convinced that is Forex trading profitable and easy.
Of course, when you finish learning, you must always apply what you have learned. Always try, when learning anything, to apply it on the chart so that you can understand what you have learned well and not forget it over time. You will certainly do this on a demo account so that you do not lose your money on the real account while you are still in the learning Level, so Do not rush to make profits.
Outdated strategies
It is very important to pay attention to learning in Forex because this market is constantly changing and do not think that if you master a strategy overnight you will find Forex trading profitable in this way because the market algorithm is constantly changing and the strategies that were profitable in the past you will find them completely useless as well as the analysis methods. There are analysis methods that do not develop and most traders have known them and there are analysis methods that are much better and more developed than them.
There is no shame in striving to achieve profits, leaving the strategy that has become old and does not achieve profits, and learning a new strategy.
Risk management
risk management
Risk management is a very important factor in the Forex market and one of the most important factors That will make Forex trading profitable in the long run.
The job of Risk management is to keep you in the market for as long as possible in order to seize the good opportunities that occur in the market. For example, if you decide to enter a trade, you will only risk 1% of your capital, which is a good percentage for a daily trader, and the take profit is 2%. In this way, in order to lose your entire account, you must lose 100 consecutive trades, and this is somewhat difficult to happen.
On the contrary, if you wanted to risk 5% of your capital, after losing two or four trades, you will find that your account is about to end and you will find yourself losing a large part of your capital. Losing 20% of your capital in a short period of time is not an easy matter, and this will of course affect your psychological state.
When you are affected by this loss, you will not find Forex trading profitable at all. On the contrary, you will blame the circumstances, the market, and those around you for this loss, and you will not admit that the mistake in this loss is not adhering to Risk management from the beginning.
If I increase the risk, will I get more profits?
The answer is yes and no because as we agreed Forex is a long-term investment market even if you are trading using scalping or you are a day trader your goal is to stay in the market for the longest possible period in order to make profits right? Imagine with me if you wanted to risk 20% of your capital in one trade in case of profit you will certainly be happy but when you make a plan you must take the worst-case scenario into account because if this scenario happens you will think about what you will do and the worst case scenario here is that you are out of the market after 5 consecutive losing trades.
Even if you double your capital, this does not mean that this method is good, as it is very risky in the long run.
Market conditions and News
One of the important factors that may hinder you in your trading and will not make trading profitable at all is ignoring the news time.
News is an essential part of market movement. Without news, you will find the market moving very sluggishly. There is strong news that moves the market many pips in a short time, such as unemployment rates, interest rates, NFP, CPI, and other strong news that you can find in the economic calendar from here.
This news occurs at different times of the month and you may notice its recurrence throughout the month. If you ignore the dates of this news release, you will expose yourself to unnecessary losses because the news does not respect any type of analysis and moves based on its results. It is possible that you will find the price moving 50 pips in one second, and this is something very normal for important news.
In order to make Forex trading profitable, it is not necessary to trade during the news. Trading during the news is a double-edged sword. You can lose if the news results are the opposite of what you expected, and you can get a lot of pips if the price goes as you expected.
Emotional control and discipline
All about Emotions
The psychological factor is very important to help you achieve profits in Forex. In order to make Forex trading profitable, you must control your Emotions during trading, because if feelings control you during your trading, you will make hasty and completely ill-considered decisions, and they will stem from anger, anxiety, or tension.
On the contrary, if you control your emotions, you will make decisions based on your trading plan that you have set in advance and you will stick to your strategy and risk management. In this way, you will find Forex trading profitable and easy.
4 – Tools and Strategies to Make Trading Profitable
There are indicators and strategies that will make trading profitable for you. The strategy is a method of analyzing the pair. If you know how to analyze the market correctly, you will be able to know when to enter the trade and when to exit it. The indicators are the same thing. They are tools that help you analyze the market and give you insight into what is happening in the price movement.
1 – Smart money concept
The Smart Money Concept is a method of analysis that is somewhat different from technical analysis, but it is more advanced in analyzing the market and finding important areas from which profits can be made.
Market structure
Understanding the market through market structure helps you determine what is dominant in the price movement, whether buyers or sellers, by identifying the Highs and Lows, The matter seems simple, but with the implementation of what you have learned, you will find that the matter is deeper than that.
Multiple time frame
It analyzes the market through more than one-time frame. This helps you know the real direction of the market, starting from analyzing the 15-minute time frame up to the Monthly chart, in order to find the best possible opportunity to enter the trade.
Analyzing more than one time frame is not only about knowing the peaks and bottoms but also knowing the supply and demand zones on all time frames. This helps you know the strength of the supply or demand area and whether the price will respect it or break it.
EURUSD 4hour
In this example, you might think that the price might go up when it reaches a support zone in the 4-hour time frame and in fact, this is somewhat logical as this area has not been broken, Indeed, the pair has risen from this area, but this rise is not the real rise that it intends to do. It is only a trap to catch buyers from this area.
And your opinion will change completely if you look at the daily time frame. You will find that there is a much better order block below this Zone, and you will decide to wait in order to get more profits and a better entry opportunity than the previous one.
EURUSD daily
Analyzing more than one-time frame helps you see what is happening in the market and make a decision based on that. Analyzing only a one-time frame will not help you understand who is in control of the current movement, sellers or buyers.
Liquidity
Liquidity is a new concept for technical analysts but it has been around for a long time. The concept of liquidity in short is to make traders lose from certain zones through support and resistance levels, Trend lines… etc or to make them enter buy and sell orders early and when they lose the price goes to their take profit but after it is too late and of course the market maker takes their money and then moves the price to its natural path after that.
I think that liquidity is an important reason for traders’ losses, and not knowing that will make it difficult for the trader to see Forex trading profitable because he is constantly losing and does not know why he is losing in the event that he has applied his strategy well and the reasons for entry and exit…etc.
EURUSD liquidity
In this example, you may find that the market maker wants to make traders lose before starting any strong movement or the beginning of a new trend by moving the price to break the support level during the news, and then the price rises to reach very far levels. They took you out of the market because They didn’t want you to profit from all those pips.
2 – Fundamental analysis
Learning fundamental analysis will greatly help you understand Forex and thus you will find Forex trading profitable and easy for you because you will understand the economic news and political events that affect the Forex market and thus you will make buying and selling decisions based on that.
Fundamental analysis requires a strong knowledge of the economy of the country whose currency you want to analyze. For example, if you want to analyze the strongest currency in the Forex market, which is the dollar, you will analyze the economy of the United States and know its political situation and what affects the currency, such as wars, economic crises, inflation, etc.
You will find the most popular news that affects the Dollar is: NFP, Interest rate, unemployment rate, and CPI, This news in particular affects the dollar significantly, and of course, you will not only analyze the dollar, but you must analyze the other currency of the pair, such as the euro.
Expert advisors will help you make trading profitable
The Expert Advisor is one of the tools that may make Forex trading profitable for you because it is an automated trader that opens and closes trades without your intervention. There are many experts that may help you achieve this, but you must test the expert first because not all experts achieve good profits.
Benefits and risks of Expert advisors
There are disadvantages to the Expert Advisor just as there are benefits to it. Sometimes you may find some errors during the Backtest or even when activating it, Therefore, it is preferable to monitor the performance of the Expert Advisor.
Conclusion of how to make Forex trading profitable
Before you ask yourself whether Forex trading profitable or not, you should know what factors make Forex trading profitable, such as Risk management, controlling emotions during trading, and using profitable strategies that are Outdated and Non-scalable forex strategy, etc. All of these factors make you see Forex trading profitable and an easy market to deal with.
