Forex trading is often sold to newbie traders as the absolute dream. The reality is that this couldn’t be further from the truth. Forex trading is actually extremely tough – only a few percent of traders ever make it work. This leads to the question, can you actually trade forex for a living? Is it even possible?
You certainly can trade forex for a living although this is only recommended for traders that have been in the industry for many years. There are many drawbacks of trading full time that must be considered before taking the risk. Most forex traders don’t need to trade full time and can comfortably trade alongside their day job.
Can You Actually Trade Forex For A Living?
It is entirely possible to trade forex for a living. However, it is not possible for most traders. The only people who are able to actually make good money from forex are the extremely experienced traders with extremely large accounts. This is because of how volatile the market is – both up and down.
It’s very difficult to consistently stay profitable in forex because there are so many factors at play. Most of these factors are beyond your control, but you’ll need to be able to manage them if you want a shot at being profitable. The biggest obstacle that most traders have to overcome is risk management.
However, there’s no reason why it’s not possible for a reasonably experienced trader who has learned their lessons and has a decent account size to actually be able to trade forex for a living.
I’ve personally been in the industry for the last 6 years now and in this time, I’ve met thousands of traders. How many full time traders have I met? I could count them on my hand, maybe one or two that make their full income from trading.
The reality is that investing is tough and the forex market is one of the hardest of them all – with nearly 90% of traders losing money over the long term. The reason not many retail traders are trading for a living is because not many retail traders can afford to – it’s that simple.
The Drawbacks Of Trading Forex For A Living
You might think that trading forex for a living is going to be glamourous. The reality is there are so many drawbacks of doing so. The most obvious one is that your income is going to be extremely volatile, especially in the beginning.
Some of the drawbacks include:
It’s Harder To Get A Mortgage
I’ve recently released a full article on how hard it is for forex traders to get a mortgage. In short, lenders know how risky forex is and they aren’t so keen to give us lending.
Lenders take into account your credit file and your trading activity. If you have a hazardous trading profile then they’ll be less likely to give you a mortgage, because it would be risky for them.
The Income Is Consistent
You can control your own actions but you cannot control the market or the outcomes you get from your trading. Most traders do not make money every single month and this will play a huge problem in your life with bills and everyday expenses.
You’ll Need Large Amounts Of Capital
To be able to survive for a long time in the markets, you’ll need large amounts of trading capital. This could be either your own capital, investors capital or even prop firm capital.
This isn’t so much of an issue these days as you can get funded with companies like FTMO, or even instantly funded with MyForexFunds – so there’s no excuse for profitable traders only having small amounts of capital!
The Stress Will Be Huge
The mental stress of trading for a living could be tough. You need to never miss a beat and ensure you do everything you can each month as you need to pay your bills.
There are several other downsides to trading forex. These include the lack of social life, no time for yourself and little chance of ever being able to work in another industry if you decide to quit. But let’s face it – if you have this much passion for trading then none of these things will bother you.
The Advantages Of Forex Trading For A Living
It’s not all doom and gloom – there are some big advantages of trading forex for a living. Do these outweigh the negatives? Well, not in my eyes but that’s down to you to decide!
You’ll Never Miss A Trading Opportunity
If you’re trading for a living, you don’t have a job to go to. This means you can be on your charts all day long and trade throughout the day. In theory, this means you’ll never miss a trade and could improve your monthly profits within the markets!
You Have 12+ Hours Per Day To Work On Your Craft
When you are either in a trade, or waiting for a trade to come, you can work on your craft. Either backtesting or simulating the live markets is a great way to do this. You’ll be able to learn faster, test new strategies, tweak existing strategies and create a portfolio of profitable trading setups to use in the market.
It’s A Great Escape And Time To Think
When you trade forex for a living you’ll be on your own. You’ll have the chance to think about how you are going wrong, what you can do better, where you can spend money or what trades to take next. You’re completely responsible for your progress and you have no distractions!
What Do You Need Before Trading Forex For A Living?
If you want to trade forex for a living, this is what I’d recommend you have before even considering it…
- 12 Months of bills, in savings
- 2 Years of profitable track record, on MyFxBook
- 2 Trading strategies minimum, for different market conditions
- Over £100,000 in funding. I’d recommend FTMO for this
- A defined and rigid trading plan to work to
If you’re missing any of these components, trading for a living is too much of a risk in my opinion.
In Summary – Can You Really Trade Forex For A Living?
In conclusion, you can certainly trade forex for a living but it’s only recommended for traders with incredible results over the long term. For the majority of traders, they need to have a job and trade with their free time.
If you’re going to become a full time trader, having large amounts of capital is essential as losing runs can happen quickly and with your entire savings account wiped out – it’s not the best feeling.
You also need a lot of discipline in forex, so there’s no excuses when it comes to missing a trade or not following your plan to the letter.
I wish I could tell you there are hundreds of traders out there making millions, but the majority are small players with enough capital to last only a few rough months. You can do it, but be prepared for sacrifices!
Do you trade for a living? Let me know in the comments below…