Is forex trading worth it? This is one of the most common questions we get through our contact form.
There are a few other common questions that we get asked now and then. So, in addition to answering whether investing in forex is worth it, we will also be looking at the other 6 commonly asked questions.
But first things first:
Is Investing in Forex Trading Worth It?
When new traders are asking this question, they actually have a number of questions vested in one:
- Should I spend time learning how to trade the forex market?
- Is online forex trading a promising venture, or is it a waste of time and money?
- Can one become wealthy (read millionaire) by trading forex?
These are all worthy questions. You really need to know what you are getting into before you start trading forex. You need to know whether it is worth to spend your time and money learning how to trade forex or whether you should look for another means of investment.
If you are asking this question, you probably fall into one of two categories of Kenyans:
- You know that you can make money trading forex. You have seen your friends or family become rich by simply investing in forex. But you have doubts as to whether you can personally do it.
The short answer here is simple. If others can do it, you also can. You don’t have to be a genius or have high academic qualifications. You only need to be dedicated, disciplined, and serious.
- The second category consists of those who have a slight clue that they can make money trading forex, but they don’t know just how much they can rake in. They probably don’t have anyone they can look up to who’s been trading forex successfully.
If you fall under this category, you probably have a few comparisons to make, and you are looking for an investment that will give you the highest return on investment in the shortest time possible.
I like to use the example of a doctor while explaining this. If you are to become a doctor, which is one of the highest paying jobs in Kenya, you’ll need to spend at least 7 years learning. After you’ve graduated, your starting salary would be around 500,000/=, and that is if you are highly specialized. To earn this much, you’ll also be required to put in at least 8 hours of work per day.
Average high school teachers in Kenya make about 60K per month. Bank tellers make about 30K per month, and a janitor will take in at most 20K at the end of the month.
How Much Money Can You Make Trading Forex?
Now, let us look at how much you can make as a forex trader.
The earnings of forex traders in Kenya vary greatly. Each trader’s earning will depend on factors such as their trading style and their account size. However, once one learns how to trade forex and starts trading profitably, there will be no limit to the amount of money they can make per month.
Say for instance, you open a forex trading account with a deposit of $2000 (200,000 KSh), and you consistently make a profit of 20% per month. After three years, this account will have grown to $1,417,603.75 (that’s more than 141 Million Kenya Shillings!)
If you start withdrawing your monthly profits after your account has grown this much, you’ll have yourself a month income of $283,520.75 (Ksh 28,352,075- yes, that is 28 million Kenya Shillings.) A lot of forex traders in Kenya have been able to achieve this, and so can you.
But Can You Really Make 20% Per Month?
I am going to tell you something that I always avoid saying. The way most forex traders trade, making 20% per month is a piece of cake. I don’t usually say this, lest I be accused of misleading people. But the truth is, you can make more than 20% per month trading online forex.[easy-tweet tweet=”You can make 20% per month trading forex” user=”demagnify” hashtags=”#KenyaForexFirm”]
How to Make Forex Trading Worth it
1. Have a Good Trading Strategy
Strategy is a part of life, it is necessary whatever you do, it bridges the gap between you and your goal. A good strategy always makes you efficient to accomplish your goal.
Trading in the online forex market also requires disciplined trading strategies. Once you have a strategy in place you can cope up with any kind of situation or environment.
Trading strategy goes hand in hand with emotions. A good strategy helps you to control your forex trading emotions however a bad strategy aggravates your emotions and forces you to take an adverse position.
How a good trading strategy makes it easier to handle emotion
Handling emotion is one of the challenging tasks in the forex market particularly during adverse market condition.
A good trading strategy puts you in a frame where you have a solution to any kind of market situations, it doesn’t matters if your trade goes against or in favor, you must handle it with full calmness.
Your good trading strategy should consist of everything depending upon the types of your trading style like scalper, swing trader, day trader or position trader.
As per your trading style & position size you should be aware of average & maximum movement of pips of currency pairs, you must know your stop loss levels and dynamic stop losses if you believe in it, your target profit from the trade etc. Being a good trader you must follow a proper risk management system by always having a cushion against extreme circumstances. Better your risk management easier it is to control your emotions.
Emotions normally goes out of control during an extreme adverse situation when you fear of incurring a huge amount of loss.
A good practiced strategy can make you overcome the situation with minimum loss. In these kinds of situation traders normally look at their losses and forget about the market fundamental & retracing of currency pairs as per previous history.
During the adrenaline rush they close the position and book huge losses, however if traders have a proper strategy by having historical maximum movements of pips in a particular kind of situation, they could easily avoid the losses.
Alternate strategy always reduces emotions by avoiding fear of losses. Your trading position goes bad but you use your alternate strategy and take a position on the opposite correlation currency pair and minimize your losses.
2. Overcome Fear
Fear is a sense that alerts about a coming danger, it makes you ready, either to fight or fly away. Fear is the biggest enemy of mankind.
In a war if you overcome fear then you won half the battle. You can overcome fear by taking it in a positive way rather than being negative. Once it is taken in a positive sense then it provides an opportunity to do even better during the fearful situation because it brings out your true intelligence and skills.
But in case you take it in a negative sense then the adrenaline rush can create anxiety, overburden, panic, sweating etc., makes you rush to the things & take the wrong decision.
Trading psychology proves that no other market puts you in a fearful situation as the forex market does. Forex market is a highly exhaustive & stressful market to trade, but with the option of high rewards also.
Traders face various kinds of fearful situation in the forex market-
If you are a day trader, scalper or swing trader then everyday you will have ample opportunity to take a position in the market. You take the position on the basis of your trading strategy and indicators signal.
You come into a situation where trading strategy provides an opportunity to take a position however you saw some other signal that doesn’t show a clear cut sign and it creates fear in your mind. Your fear prevents you from taking the position but later you find that you could have made $1000 if you would have taken the position.
Being a trader you always have to face these kinds of situations and at that time you need to believe in your strategy and overcome the fear of loss and think about the profitable opportunity that you are going to miss if you don’t take the position.
Trading psychology says that in the forex market it is very important that you use advanced trading tool to take maximum profitability from a trend. There are situations where the fear of losing money cuts short the profitability & doesn’t allow to take maximum benefit of a trend.
Being a trader you should not allow your fear to overcome your trading strategy. The opposite is also true when you are losing money, fear of seizing account forces you to book huge losses though you realize afterwards that the market retraced back and you could have saved the losses you booked.
Fear is the enemy of the forex market, it will eat you if you don’t eat it, overcome fear, believe in your strategy and make super profit.
While social trading remains an infant industry, there really is the scope for it to change the way that people trade and invest in the future.
This is mainly because of the many advantages of social trading, such as these:
- Investors do not need any market or technical knowledge to start trading. This is very unique, as traditionally investors could not realistically hope to turn consistent profits from the markets without a solid understanding of finance and trading.
- Social trading facilitates the leveraging of skills and experience – anyone can simply shadow the trades of professional investors/traders and gain the same profits (or losses).
- There is a high level of transparency with social trading – all trading activity made by professional traders are recorded and accessed via an open book.
- Use and application of advanced technology. Social trading is only a possibility because the web, coupled with sophisticated software allows for trades to be copied exactly.
- Social trading offers a great way of learning more about investment and finance. When you see specific traders being profitable on a consistent basis, you can learn more about their trading styles and strategies. It’s a superb hands on way of learning more about the markets and about trading styles and strategies for those who want to.
Social trading can be a great way to invest, and grow your own equity with the pro’s. However, in order to really make the most out of your social trading experience it is recommended that you follow the below tips:
1. Choose The Right Social Trading Network – There are many things you need to know before choosing a social trading network. For example, first you need to figure out what your risk reward expectations are. Different social trading platforms allow their members to take different levels of risk. So, at the moment, sites like Currensee are more for risk averse traders while sites like eToro allow the user to determine their own risk agenda. The amount of risk you want to take should have a bearing on your ultimate choice of social trading network.
2. Do You Want To Try A Demo Account And Trade In A Simulator? Equity preservation is the first priority of every trader. If you are new to social trading then you may want to try your trading in a simulator first. Some social trading websites such as EToro and Zulu trade will offer this feature. In a demo account, you trade in real market conditions with the only difference being that the money is “virtual”.
3. How To Choose A Social Trading Broker – Choosing a social trading broker is an important part of the overall social trading process. For starters, the broker will charge you fees, and to maximize your profits you will want these fees to be as low as possible. This is the only way to ensure you get a good return from your trading over the long run – broker fees add up. The fee types can include fixed fees and spreads as well as carry over fees which are charged when traders leave their positions open overnight. Other features that you may want from your broker will include demo account functionality, a good trading platform that is easy to use and a good selection of trading tools, analysis and education.
4. Tips On Selecting The Social Trading Broker – When selecting a trader to copy, you should ideally look for a trader who has had a good, long term track record. Many traders may have high profits over shorter terms – but it is the long term track record that we are interested in. Look for a minimum period of 12 months. Consistent results are important – this will indicate that the broker has a good strategy that brings in profits on a regular basis. Ideal to copy! Also, find out how many other people are following the trader with their real equity (not with dummy accounts). Check the traders profile and what strategies he appears to be using when he trades – reconcile this against your own ideal trading style and strategy.
5. Don’t Forget About Risk Management – Successful trading is all about managing risk. Being able to identify trading opportunities that offer good returns for low risk. Remember that when you trade in the markets, your money is at risk so you should never invest funds that you cannot afford to lose.
Is Forex Trading Worth it?
Forex trading is totally worth it. With the right strategies you can make a living trading forex and working for lesser hours than you’d when working a 9-5 job. There are a lot of examples all over the world of people who changed their fortunes by trading forex. One of the most common names out there is George Soros whose story you can read here.
Risk Disclaimer: Is Forex Trading Worth it?
It’d be imprudent for us to end this article without a risk disclaimer. Forex Trading is profitable, yes, but if you do not follow the right track, it is also the easiest and fastest way to burn your money. You can lose a lot of money in this business. You can even lose all that you have- I’ve seen this happen to a few fellow Kenya traders.
Don’t rush after wealth and riches. Aim to understand the ins and outs of the market first, and everything else shall follow. If you liked this article, kindly share and comment.