Unable to fall asleep one night, I flipped on the television and stumbled upon a late-night infomercial about Forex trading. It went like this – some “everyday Joe” proceeds to get rich quick trading, turning a few thousand dollars into a million in a few months or so. I watched just long enough to see Joe trader proudly display his brand new sports car that he had bought using his Forex earnings. Now that’s the dream right there, isn’t it? Honestly, clever marketing just like that is why a large percentage of new Forex traders come into the market, searching for little more than an easy way to get rich quick. Unfortunately, only few trading newbies are able to see through the façade and approach Forex trading in a sensible and patient manner.
So getting back to the original question of this article – Is Forex a get-rich-quick game? Let’s break this down into two separate questions
Is it possible to get rich in Forex trading?
Of course it is!
Is it easy to get rich quick in Forex?
The rest of this article explains why this is so.
Forex trading is a business investment
People trading Forex long enough will know that it takes time, determination, skill and discipline to build up your account to a reasonable size. Yes, with a bit of luck, becoming rich quickly is a possibility. Nevertheless, to reach such heights of success you have to treat your trading like a business investment. Most of the highly successful traders had to trade for years before they could get a sniff at high success levels. They treated Forex trading as a business venture.
To be successful at trading, forget about treating it as a gamble. This is a business investment and you need to have a business strategy in the form of a trading plan. In order to become a millionaire Forex trader, you first have to become a consistently profitable trader by really learning the art of Forex trading. This takes time and effort. Just don’t expect to start an account with a few hundred dollars and make a killing.
Forex trading requires knowledge and learning
Remember the story of the tortoise and the hare? Yes, it’s a kid’s fable, but grownups have got a lot to learn from it as well. The hare’s mentality goes like this – “Let’s trade a bit on demo, maybe read one or two trading lessons tops and I’m on my way to make millions!” Successful traders adopt the mentality of the tortoise. Realizing that Forex Trading will not make you a millionaire overnight is the first step to this. Just like no one would drive a sports car before they go through driving school, you will need to learn how to accurately read price charts, how to read, translate, and generate trade signals, how to analyze the market, and how to accurately predict price trends in order to be a successful trader.
Unfortunately, a lot of new traders operate with the hare’s mentality. They start trading a live account before they even put in the work to get their basics right and test their system. They never even bother to trade in the demo account to practice trading in different market conditions. When somebody achieves quick returns within a short span of time, it might prompt beginner traders to push their luck before they are equipped with basic knowledge on Forex trade. What they don’t see is the enormous amount of risk they are taking; for every $1 that they are making, they are probably risking $100. It is only a matter of time before one wrong trade will wipe out all of their previous consecutive winning trades.
Once you are equipped with the basics of investing in Forex, you have to train and practice on your technique and perfect your trading strategy over time.
High returns require high investment
Most get-rich-quick schemes involve the promise of very high returns on very small investment amounts. The Forex market is the most popular for speculation, due to its huge size, high liquidity, and tendency of currencies to move in trends.
The only way to ensure high returns for minimal investment is to trade on small margins taking on high leverage, be perfectly accurate in all your price movement predictions, time your trades perfectly, and put back profits into subsequent trades. This is an ideal situation that is highly improbable to happen.
The phrase “It takes money to make money” seems especially fitting here. To find real success in Forex trading, you need to gradually increase your investment levels as you gain experience from profits and losses. You simply cannot join the currency trading market today, put in a small amount, very little effort, and expect to become the next Warren Buffet.
Forex is clearly a grow-a-bit-richer-each-day method. There is no doubt that it can be a lucrative and rewarding business opportunity for those that are clear minded and dedicated. The truth is that even successful traders with years of experience still suffer periodic losses. Just like I said in the beginning of this article, becoming rich through Forex trading is an achievable goal. But you need to set realistic expectations and expect fair returns only if you have invested a fair amount of money and time.