Not all Forex traders are dedicated, skilled or perhaps even lucky enough to be able to trade full-time. The vast majority don’t, and it takes a reasonable amount of dedication, skill and occasionally luck (although this last factor is less important if you develop good strategies, habit and discipline) to make a profit trading part-time.
That doesn’t mean you shouldn’t take your trading seriously however. It might be more of a hobby than a job for some, but if you don’t approach it methodically and carefully, it could end up being an extremely expensive hobby. The very worst thing you can do is to treat it like a trip to the casino, throwing good money after bad and trusting entirely to luck or hunches.
There are many different business models but the basic aim of all of them is the same – to survive by turning a profit. At its simplest, this means bringing in more cash than you spend and your Forex business, whether full-time or not, is no exception. Your income in Forex terms comes in the shape of winning trades. Losing trades may well be your biggest ‘outgoing’. Even highly experienced, skilled and careful traders make the wrong decision sometimes, but there will also be other costs to consider. These will generally include your broker’s commissions and the costs of your computer hardware and software. You could even add the cost of the electricity you use on to that. It seems obvious, but to turn your trading into a successful business, your profitable trades have to outweigh all your outgoings combined.
The two broadest strategies are to make a lot more successful trades than unsuccessful ones, or to make sure that the profits you make from successful trades are larger than the losses you incur on the unsuccessful ones. There are, of course, countless refinements beyond that, but your trading style is your first choice. Many experienced traders find that the latter style is actually the easiest to apply consistently. It’s even possible to lose more trades than you win and still turn a profit, so long as you manage your risk/reward ratio wisely. It can be a great relief to realise you don’t have to win all or even the majority of your trades in order to make money.
Different styles suit different trader types and personalities, however. It’s important to find the strategy that’s right for you and to work at perfecting it. That isn’t to say that true perfection is possible in an area like Forex, but you can certainly hone your skills, competencies and consistency. Consistency is key in Forex success. Just like a conventional business, you have to establish patterns and routines that work. A slapdash approach is highly unlikely to be successful. At the same time, you have to realise that you can’t actually control the markets. Stick to the rules you set for yourself, and if the market isn’t doing what you’d ideally like it to do, exercise patience in order to make your trading business a success.