Forex trading involves investment in the foreign exchange (Forex) currency market. It is a highly volatile trading method that can lead to big losses if not backed by expert knowledge. However, the demand for forex trading has seen a drastic surge since the pandemic as people are finding ways to invest and make more money.
Forex trading is mainly popular because you can start digging with little starting capital. In return, you have the potential to earn big profits if you play the cards right. The trading is in action 24 hours a day.
However, there is one big question that everyone entering the world of forex trading has – how much can you make trading forex? If you are curious to know, keep reading this guide to know all the details. Let’s begin.
The Potential For Earning Money Through Forex Trading
There is no fixed and set answer to how much you can make trading forex. There are several factors that determine the income potential and returns on trading. Opportunity for profitability exists. For example, a Chinese trader once went in and started off with only $100 and ended up earning $100000 within a few weeks’ time.
However, that is an extreme example, and it involves a lot of high-risk strategies. Not everyone can tolerate or has the resources to go down this road. One thing to remember here is that there is practically no limit to the amount of money you can make trading forex, but it is no shortcut to accumulating wealth.
Most people who go all-in and rush to get results will fail because forex trading does not churn out millionaires every second. You need to map out your strategy, have knowledge of the foreign exchange market, finalize your capital, and then dig in. Tools like Telegram.Forex can help with trade decisions.
Factors To Consider Before Trading Forex
There are a few things to consider before getting on a platform to trade forex. One of the first things to decide on is your risk appetite. It is the amount of risk you can bear while trading. Remember, profit and risk go hand in hand. If the risk is higher in a case, the profits might be higher as well, but you must be able to bear that high risk.
Even after doing your due diligence, you can still end up losing everything. So, you must know what money you are going to invest that you can tolerate losing. Your risk appetite will determine your initial capital.
You will also need to figure out the leverage you have and your strategies going into forex trading. All of these and more factors will determine how much you can make.
How Much Money Do You Need To Get Profits?
The profits for forex trading are not calculated in hard numbers. They are comprehended by looking at percentages. For example, if you are starting out and have a small initial capital, 1% profit might not be that much to you, but for an expert trader who manages millions in capital, that 1% can mean a big profit.
So, your deposit can have an effect on the percentage of the profit, keep in mind the risk as it can also turn into a big loss.
There is no set profit limit. The amount you can make trading forex depends on factors like risk appetite, risk management, strategy, capital, and other factors you can’t control, like the volatility of currency in the market.
Think as big as you can. In forex, the sky is the limit.