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Can you live on Forex? Truth or myth?

Can you live on Forex? Truth or myth?

Do you think you can live off the Forex?

You’re asking yourself this question because you’re interested in making a living as a trader and you’ve probably heard that Forex is one of the best markets for making a living.

This falls within the general theme of “living from trading”, but in a very specific range: the Forex market.




Because after all the Forex market has its peculiarities and whatever they say is quite different from others like stocks or commodities.

Therefore, within this trading market there are many people who claim to live from currency trading.

What is the truth about it?

I’m sure the brokerage people know.

After all, they have access to the data of hundreds of thousands of clients.

What data could those brokers give us?

How many Forex traders live exclusively from currency trading year after year, and keep it for 5 or 10 years?

I don’t know why, but something tells me that there aren’t many of those.

Trading Forex for a Living
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Let’s be honest.

Forex is a very difficult market to live in.

It’s not for lack of candidates, of course.

Few markets make it so easy for us to trade.

In fact, it’s my favorite market and recommended for people to practice day trading and try out strategies.

Why?

Because it is the easiest and most flexible market.




With only 100 euros or dollars you can open an account and trade mini-blocks of 1,000 units with a leverage of up to 30:1 in Europe, or 200:1 in some other regions.

If we add to that that the commissions are usually small and the spreads of the main pairs are also small, then we have the ideal conditions for small traders to practice trading.

Now, here I am talking about practice and learning.

But what we want is to earn in Forex trading; that is to say, to earn to live from it, of course.

After all, we are not putting in the effort and time for the love of the art.

Even those who are learning Forex trading do so with the aim of achieving the strategy and style of trading that allows them to win on a regular basis and then, with more money, to be able to live from currency trading.

Example of the advantage of Forex over futures

There is nothing better than an example to show you that Forex has its advantage and that is why I like it better than other markets when it comes to trading.

We have two individuals A and B.

Individual A finds a Forex guru and buys a course from him for 500 dollars or euros.

After the course in theory, he is already a professional day trader and decides to put into practice what he learned in theory.

He opens a Forex account with $300 and starts trading a contract for 3 microlots, which would be 0.03 lots or 3,000 units.

When they spend two months doing frequent day trading, their balance is at 0.

You realize that the so-called “professional trader” course was a tall tale.

Individual B finds a futures guru and buys a course from him for 500 dollars or euros.

Then, as in case A, he decides to put his knowledge into practice.

The difference is that to trade a futures contract he requires a larger account. Since the minimum future is the micro of the S&P500 – before there was not so much luck and you had to trade the mini, a much larger contract of more than $100,000 – you can trade a contract of the same, which in nominal could be about $15,000, 15 times larger than the Forex contract.

Risk Warning: CFDs are complex instruments and have a high risk that capital can be lost quickly due to leverage. Between 74% and 89% of retail account investors lose money when trading CFDs
In this case, he opens an account with $4,500 and starts trading 3 of these mini-contracts.

As in case A, at the end of a certain period your account goes to 0.

Unlike Case A, he lost $4,500, considerably more than the other one.

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This doesn’t mean that the trader can’t trade more contracts on the Forex but my point here is to show that this market offers more flexibility and therefore it’s better to learn without losing your shirt.

And believe me, this is what happens in most day trading guru courses whether it be Forex, futures or critp trading.

Now, the million dollar question is:

Is it possible to make a living from forex trading?

It may be possible, yes, but it won’t be for the vast majority of traders.

You have to get that into your head.

Many believe that the power to “live off the forex” is something that comes easily.

For example, the amount of people who buy “professional” Forex trading courses is incredible.

They believe that those thousands of traders who buy these courses will end up being professional Forex trading experts, who with a few trades a month will be able to make a living from it.

Nothing could be further from the truth.

It goes without saying that most of these courses are a scam.

You are neither going to become a professional Forex trader nor are most of those Forex traders living off of trading.

However, it is one of the niches that attracts the most interest.

Becoming a professional forex trader is a lot harder than taking a course.

You can be sure of that.

I’ll give you an example to show you how hard it is to trade forex for a living.

Write it down well, because I want you to remember it and come back to buentrading.com when you have done it.

The example is simple.

It’s all about finding people who live from forex trading.

Perfect.

Let’s go to these social trading pages to see who the best traders are at any given time:

Zulutrade
MyFxbook
eToro
Darwinex
Ayondo
Choose the top 7 or 10 of each of these services that are trading Forex. Keep in mind that with brokers like eToro most are trading other products, so it will be hard to find pure forex traders; but there will be some.

Well, when you have this list, save it to a document on your computer.

After a year, or better yet, two, check out these leading traders in each of these markets, and tell me how many of them held up as leaders, or didn’t make a loss.

I’m sure you’ll be surprised.

Although, I know. It’s a long time to wait.

Who has that kind of patience?

No one, but it’s not that hard for you to do the experiment and leave it written down in a Word document somewhere.

How do I make a living trading in Forex?

Surely there must be some strategy to make money in this market. But which one?

But the game isn’t just about strategy.

But of ways to live of the Forex, and not all they have to be doing trading.

Let’s look at the ways and tips to make a living from Forex.

1 Live off the Forex with a $2,000 account?

Many believe that there are people out there who with accounts of a few thousand dollars are able to earn a monthly income trading Forex.

The fact that there are countless gurus promoting this mentality in countless articles on the web and videos on youtube does not contribute in any essential way to the cause either.

Let me tell you something:

That’s a chimera.

If you want to make a living trading currencies or any other type of trading you will need an account of at least $200,000 or more, depending on your circumstances (where you live for example).

If you are able to make a 30% annual profit for 5 years or more you can consider yourself an exceptional trader.

In that case you will need a fairly large figure in your account.

Forget about living off the Forex by making a 30% annual profit on a $4,000 account.

The only shortcut would be to use one of the social platforms I mentioned earlier and get many people to copy you in order to manage more capital and get a share of the profits.

If you think that’s possible, then give it a try.

But don’t forget to do the leader test I told you about earlier.

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Really, it’s not wasted.

You can tell me about it later if you want.

2 Living off the Forex as a hedge fund manager or a mutual fund manager
This would be an interesting option.

Of the hundreds and thousands of hedge funds that there are or have been, how many do you think have been trading Forex?

I’m way ahead of you.

Successfully?

Even fewer, I’m telling you.

What does this tell us?

Well, that if out of 1,000 hedge funds we have that most invest in stocks or indices, that’s for a reason.

If Forex was so profitable they would do it in Forex, but it’s not.

The same with investment funds.

How many funds do you know that invest in “forex trading”?

That’s about it.

You can read more about Forex hedge funds by clicking on the link.

And by the way, be careful what many sites advertise about “forex funds” with high returns. I’m telling you, a lot of those are scams. The higher the return the greater the chance of fraud, but also the greater the number of traders and investors attracted, unfortunately.

3 Become a specialist in algorithmic trading

One of the things that Forex has brought us and its extreme flexibility is the possibility to develop a giant market of algorithmic trading in the retail sector; that is individual traders.

Metatrader 4 and its huge community was responsible for this.

What does it mean?

That in that market you can find opportunities as a programmer, either by making your own systems or by ordering them.

Moreover, you can then apply this knowledge to other asset systems such as futures or cryptosystems.

Have you seen the Mql4 (here) or Mql5 page where they sell systems?

Well, this is just a small sample of what moves in these markets.

Who knows?

Maybe one day you’ll find the perfect algorithmic system.

However, I must say that in this field there is a very big problem: expectations.

Something that happens very often is that people develop a seemingly good system and start making a lot of money the first few months.

The typical system that in 6 months has been earning 80%.

Many people see that and would be willing to pay to get something like that.

The problem is that those expectations are not maintained in the future in most cases, and that good system ends up losing that 80% and more.

That’s why in trading and investment what counts is the long term.

And no, that you make a system that gives benefits in the short term does not guarantee that it will be a winner in the long term.

Many algorithmic traders are attracted by this “expectation” and fall into the trap.

What has real value is to build a method that makes profits in the long term and that is not easy to achieve.

Moreover, you can also teach algorithmic forex trading and make a living out of it.

4 Living Forex with day trading or swing trading

The vast majority of novices who are looking for a way to make a living in Forex (or any other market) are getting it by doing day trading.

In other cases, such as DAX futures, it makes more sense because it is easier to sell than “day trading to avoid over-night risk”.

However, in Forex this is not so important because Forex doesn’t close at night.

So why do intraday trading when you can just let your positions run?

After all, that’s one of the classic trading tips: let your profits flow.

That day trading is not beneficial for traders is because of the fact that they suffer such large expenses in commissions.

If you let 80 pips run you will make far fewer trades than if you let 8 pips run. In the end it’s as if you pay 10 times more in commissions.

That’s why it’s best to focus on swing trading, which your portfolio and your system will appreciate in the long run.

After all, well-known hedge fund managers who have traded Forex always name the fact that most of their trades last longer than a day. Look at the example of Bruce Kovner, who liked to trade exotic currencies from time to time, or Paul Chappell (here’s the interview in English; use the google translator and read it. It’s not wasted).

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Another thing you should notice in most interviews and articles you can find on this subject from known Forex traders and hedge funds is that it takes trends and volatility to make a profit.

It is well known that as of 2009 and with less clear trends, most of the large Forex hedge funds closed. Those hedge funds needed clear trend and carry trade markets. And that kind of markets are better traded by swing trading for weeks and months than simple 40-minute trades.

5 Living from Forex Fundamental News Trading

This is another of the really popular niches in the Forex world.

Here they sell us that the volatility at these times is so great that it presents us with many opportunities to make money.

Right in the first part.

In the second part – making money – not so much.

Volatility gets extreme, yes, but so does the decline in liquidity. Then comes the problem of problematic settlements, of orders not closing as they should, and that sort of thing.

If you want to read more about it read my Forex news trading article.

My advice at this point: if you want to try it out, do it with demo accounts first.

Conclusion: Can you trade Forex for a living?

You want to know if you can live from Forex trading but from what I’ve told you you can see that it might not be as easy as you thought.

Of course it couldn’t be.

Do you think it’s easy to make $2,000 or $3,000 every month sitting in a chair with little effort?

Or that someone who does is going to share it with you easily?

Ask yourself these questions honestly and you will understand that it is not easy to make a living from this.

Now I will give you my opinion about the Forex as a market.

I have traded it a lot for many, many years, and I can tell you that it is very difficult to get winning accounts in the long run.

It can be done, but you can’t expect miraculous returns either.

However, in the end as a trader one has to choose what works best for you.

And in this case it’s not Forex.

It’s not by chance that most investment funds or hedge funds carry out their trading in stocks.

Being able to trade stocks, indices or commodities Forex is relegated.

If you notice, one of the things that is always mentioned is the issue of trends.

This is not just me, it’s all the great traders known to history.

So if what we want is a trend, why trade Forex if you have things like Apple or the DAX 30.

The trends in those instruments are much clearer than in the GBPUSD, to give an example.

In fact, that’s one of the things that was blamed on the big Forex hedge funds years ago, before most of them closed down: the fact that many didn’t know how to diversify their assets when the time came. But of course, this is easy to say in hindsight. When something is going well, why change it?

However, we have also seen that there are some ways to make a profit in Forex.

Imagine that you are a trader who is able to earn an average of 20% per year.

That’s more than you get from investing in long-term indices.

If you have $200,000 you can earn an acceptable annual salary, although not as much if you live in the United States – better if you live in Spain or even better if you live in Colombia.

But getting there is going to cost you.

Also, just like what happened to the hedge fund managers, you think your system can also get its San Martin, so it wouldn’t hurt to diversify and put some of the profits into other investments, such as buying long-term stocks.

In this trading world, you know, nobody guarantees anything.