How Forex Traders Make Money Easily And Accumulate Wealth Faster With A Strategic Plan And Long Term Mentality
I want to be clear right from the start…
When I am talking about “how Forex traders make money”, I am talking about at-home, retail Forex traders.
There are two basic types of Forex trader:
- Professional, institutional Forex traders that trade accounts on behalf of clients.
- At-home, retail Forex traders that trade their own account for personal benefit
I am an at home Forex trader. So, that is what we are going to be talking about on this page. More specifically, how Forex traders make money.
We will cover some of the basics. But there are some “hidden gems” about how Forex traders make money as well.
Forex trading is more than something I do to “make money”. Trading Forex is the cornerstone of my wealth building activities. So, I’ll be approaching this topic from the standpoint of building potentially life-changing wealth through Forex trading.
Trading Forex the way I do allows me to accumulate wealth faster, create multiple income streams and is essential for securing my financial future. A lot more going on here than just making money.
I recommend reading this page all the way through to make sure you don’t miss any hidden gems. Later you might want to revisit a specific section, so I’ve provided a Table Of Contents.
There really is no special equipment necessary to make money as an at home Forex trader. But there are some essential things you must have.
»Computer & Internet Connection
The Internet is what makes trading Forex for profit as an at home Forex trader possible. With a computer and an Internet connection, you can participate in the Forex market directly.
»Forex Broker Account
In order to interact with the Forex market in real time, you’ll need a Forex broker account. A lot of people get nervous when choosing a Forex broker. But it really is a pretty simple and straightforward process. Best Forex Broker To Use
»Forex Trading Platform
Next you need a trading platform that allows you to access Forex charts and take trading actions. I personally use the free Metatrader4 Platform offered by most brokers.
There really is no need to get fancy and pay for expensive platforms
»Forex Trading Strategy
The Forex trading strategy you use is what determines HOW you interact with the market. The strategy you use not only tells you when to buy and sell, but also how to manage the trade once you’ve entered the market.
We want to make real money from our Forex trading efforts. Therefore, we must have a real account funded with real money. So, just like any other business opportunity, if you want to make money trading Forex, you’ll have to make an initial investment.
»Time To Trade The Forex Market
You’ll also need time to trade the Forex market. But Forex trading does not have to be time consuming. As a matter of fact, the way I teach to trade Forex only takes 1 minute a day, 5 times a week.
In a nutshell, Forex traders buy and sell currencies.
But that is a little too vague.
Currencies are traded as PAIRS. For example, the GBPJPY is the currency pair made up of the Great British Pound and the Japanese Yen.
Here is how Forex traders make money…
- If they think the price of the GBPJPY currency pair is going to go up… they buy. If the currency pair does increase in price, they make a profit.
- On the other hand, if they think the GBPJPY currency pair is going to go down… they sell. If the currency pair does decrease in price, they make a profit.
When you place a BUY trade you are effectively buying the GBP and selling the JPY at the same time. Similarly, when you place a SELL trade you are effectively selling the GBP and buying the JPY at the same time.
When a Forex trader makes the correct decision (buy or sell), they make money. When they make a wrong decision, they lose money.
On a trade by trade basis this is easy to understand. Forex traders make money on winning trades.
However, when you want to know how Forex traders make money and are profitable over the long term… there is more to it.
OK, so if you want to be a Forex trader that makes money, all you need to do is win all the time. Sorry to burst your bubble here, but that just is not going to happen.
I would argue that this way of thinking is what is responsible for most of the failures.
You see, you are going to be trading over the long term. That is how you accumulate wealth. So whether you are profitable or not is the result of how your winning and losing trades relate to each other.
Here is the key to being a profitable Forex trader that makes money over the long term:
Your winning trades must make more money when you win
than you lose on your losing trades.
I know this sounds simplistic. But you’d be surprised how many Forex traders completely miss this point.
Here is a common and disastrous scenario:
- A Forex trader lets their losing trades run.
- The same Forex trader cuts their winning trades short.
Just think about it…
If you let your losing trades run you are going to lose a great deal of money on losing trades. And if you cut your winning trades short, you are only going to make a little money on winning trades.
That is the opposite of what you want to be doing.
The key to long term success is to trade in a way that allows you to make more money on winning trades than you lose on losing trades. And this proposition should be at the core of how you trade Forex.
Consistently do this… and you will be a Forex trader that makes money.
Most people who get into Forex trading focus on win rate. After all, they think if they win a lot they will automatically be profitable. Plus, it fits with human nature where we all like to be “winners”.
But as I’ve shown above, winning a lot does not mean you are going to be profitable over the long term. You still need to make more money on winning trades than you lose on losing trades.
That means making the focus of your Forex trading on risk to reward.
Just think about it…
If you make twice as much money on a winning trade than I lose on a losing trade… you don’t even need to win 50% of the time to be profitable.
Now, think how much better that scenario is when you are winning 3 times, 5 times and up to 10 TIMES on winning trades than you lose on losing trades.
Yes, that is how Forex traders make money over the long term.
This means you need to strategically design the way you trade to focus on risk to reward.
I’m fond of saying…
Strategic planning is more important than skill.
That simple statement is essential to my Forex trading success. And it can be for yours too.
Don’t get me wrong. There is more to making money as a Forex trader than just focusing on risk to reward. But a strategically designed way of trading that prioritizes risk to reward is a must.
You should now have some insight into how Forex traders make money. And frankly, you should be excited.
- There is no special, costly equipment you need to get started
- You can get started with a moderate amount of investment capital
- And if you strategically design your success, you don’t even need to develop a high level of skill.
Making money as a Forex trader is pretty straightforward.
Make correct decisions on when to buy and sell currencies in a currency pair, and you will make money.
But if you want to be profitable over the long term, you need to think and act strategically.
This way you can accumulate wealth faster than other investment opportunities, create multiple income streams and secure your financial future. To reach your long term goals, focus on wealth building.
To Your Wealth,
If you’re still not ready to start Forex trading to accumulate wealth, get this free training: