Many people are drawn to forex trading because they have read about the vast fortunes that can potentially be made from this seemingly simple activity. However it is obviously not as easy as it sounds, which is precisely why only around 5% of forex traders actually make money.
In many respects it’s the sellers of the various forex products that are to blame. In order to sell huge quantities of their product, whether it’s a forex system, an expert advisor or a trading course, they will garnish their sales pages with sports cars, yachts and mansions, and talk about the huge gains that can be made from forex trading, and their product in particular.
However you should try and ignore many of these hyped up sales pages and set your sights a lot lower. If you go into forex trading with the goal of turning $5000 into $1m, for example, then you are almost certainly going to end up disappointed, and furthermore you will probably lose your initial capital as well.
Of course on paper you can achieve these kinds of returns thanks to the high leverage that is offered by most brokers, but in reality your chances of doing so are very slim. This is because when you use large amounts of leverage you are running the serious risk of blowing up your account as soon as you encounter any losses.
So you need to be realistic about your goals when trading the forex markets. If you can grow your account by 5-10% per month then you can consider yourself to be a very successful trader.
You don’t need to take big risks with your money. You can still create long-term wealth by building your account up slowly. If you can create a profitable system and only risk say 2 or 3% percent of your capital per trade, then your account will grow quite substantially in the long run.
The key is to manage your risk. You want to cut your losses early and try and let your winning trades run for as long as possible. That way you don’t necessarily need a trading system with a very high success ratio in order to make money.
So the point I want to get across is that you shouldn’t see forex trading as a form of gambling and take undue risks in order to become extremely wealthy. Instead you should take the slow and steady approach because that way you can still create long-term wealth without having to experience the wild highs and lows that most traders experience.
Click on the following link for free forex tips and strategies, including the exact 4 hour trading strategy that James Woolley uses himself to trade the markets:
Winner’s Edge Trading, as seen on: