Most people believe that it is so easy to make a living as a trader, or at least those in this industry are making a lot of money. Both are correct, but what people misunderstand is the concept of “trade.” The basic fact of this industry is that the vast majority of people lose money, and there are only a small number of winners. However, this myth is so widespread that most people believe that many people in this business have made much money because it is not so hard. Many factors can lead to a volatile market. Following parameters can help to understand how much one can make by investing in Forex.
To become successful, a trader must execute a proper risk management plan because it is one of the most important things in the industry. He must maintain the risk lower than 1% at the beginning. Suppose one has $1000 in the account; he must keep lossless than $10 in a single order. It may seem small, but the summation of losing the same percentage on many lots can make a loss of high figures.
Day Trading Strategy
A strategy depends on various components but mainly on win-rate and risk to reward ratio. But to make a consistent profit, a trader needs to depend on other various factors. For instance, they need to have strong control over their emotions since they know it will help them to earn more money.
Win rate refers to the winning trades in the aspect of the total deals during a particular trading session. Maintaining a high win rate is not that essential but having less than 3 percent of a successful person in the investment world, makes every minor detail very important for the traders.
Risk/ Reward defines how much asset one can risk gaining a certain return. If you lose 5 pips to win 10 pips, then it is a winning deal. But dealing with high risk/reward can lower your win rate. So, you should find a perfect balance like the top traders at Saxo capital markets. Only then you should be able to optimize your execution process.
Most forex brokers allow around 50:1 leverage on major currency pairs. So if one has a capital of $1000, then he has a chance to trade $50,000. However, if he lost his deals and if it is equal to his capital, the broker will stop his access to do more business. Because brokers want to make money with your money, but they won’t allow you to invest their money if you have nothing.
Slippage is a very common situation in the high-velocity market. It is an irresistible term in trading. It happens when there is a large amount of loss than expected and even there is a stop loss condition. It is not easy to find a good profit in the market when the market is moving slowly. But if slippage happens, the result becomes worse.
Forex Day Trading also requires a lot of determination and persistence. When one starts here, he may feel like it is a game. But remember that it is not just a game; it is a real-life business that involves using your money to buy and sell other people’s money. Many people around the world are willing to risk their money to make a profit.
Earn by Forex day trading helps to become a professional. There are a lot of different ways to earn by forex. But, most people fail in trying because they are just not sure how to make it work. It is always recommended that to start with a small amount of money, especially if you are still learning how to make trades. Beginners can always learn from others’ mistakes and the more successful they become, the more they will be able to earn by forex day trading. You should always use some sort of indicator to help you predict the market before it happens.