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How to Make Money in Forex Trading from Scratch: Step-by-Step Guide for Beginners

Forex is a financial market where currency exchange takes place. Trading on the difference in exchange rates, you can profit from a dozen dollars to amounts with several zeros. This process is called trading. How successful it will depends on the knowledge, experience, chosen strategy and luck of the player, as well as on the originally invested sums.

Make Money in Forex Trading

Everyone can become a trader, but only a few can enter the list of millionaires who have put together a fortune on Forex. In contrast to them – a lot of negative examples, when traders lost all earned and invested money. Is there a reasonable middle ground and what should be done to find it? You will learn from our review.

How much can you earn on Forex?

Cases of grand enrichment in Forex would not have gone down in history if they were fixed daily. Also, many traders, having received a large profit, often lose their vigilance, make mistakes and lose everything. A successful trader earns an average of 10-20% of the amount he contributed to the deposit account and put it into circulation on average. The larger the deposit, the lower the risk, because you can trade for a smaller percentage, but in absolute terms, you can get good money. In this manner, for a professional trader, the primary concern is to have the capacity to save and increase the size of your deposit to receive a steady income from it. Traders prefer not to tell their earnings once again. In this, there is a share of superstition inherent in any professional players.

Those who dream tomorrow to break a big jackpot, once and for all to fix their financial situation and rest on their laurels the rest of their lives, are waiting for disappointment: millionaires who made a fortune in Forex, went through these years. So, one of the legendary traders, Richard Dennis, really managed to earn more than $200 million, but his profit from one transaction was about 5%. Such a result would suit many people – the question is whether you are ready to invest time, energy and money to achieve it constantly? Besides, talent is also required.

Forex for Beginners or How to Start Earning without Having the Experience and Money?

Currently, the cost of entering the market can be negligible – many brokers offer to open a deposit, starting with a symbolic amount of $1. It is clear that the profit from this amount will also be negligible, so customers are given a leverage in the ratio up to 1:50. This means that with a deposit of, for example, $10 for Forex transactions, you will be available $500, $490 of which is provided for temporary use by a broker firm. However, access to the remaining amount of money automatically terminates as soon as you lose your own $10.

It is not necessary to invest huge money at once, $300-400 is enough to reach a stable income gradually. Many of those who earned in Forex started this way.

Step 1 – Select a Broker

We recommend only giant and popular Forex brokers who can be trusted – they occupy top places in numerous ratings. Among them, you can name such companies as FOREX.com, OANDA, TradeKing Forex/Zecco, etc. All major brokers, being interested in your earnings, provide free access to training materials, as well as organize paid courses and seminars.

Step 2 – Education

Without training, there can be no successful trading. It is better to invest more money in a special education and start trading with a smaller deposit than to lose money because of a lack of knowledge. The basics of trading can be learned for free: video courses, books, webinars, forums – all this is available on the Internet. Try to use every opportunity to gain new knowledge, and remember that a true professional is continually learning. Even successful traders do not disregard the chance to pass the course they are interested in on a fee basis, to raise their level and learn from experts. Universal step-by-step instructions on how to make money on Forex once and for all, you will not be offered.

Step 3 – Choose an approach

Having received theoretical knowledge about the subject and practicing on demo accounts, you can proceed to practice.

1. Define short-term and long-term goals.

At the end of the training, you must imagine what your trade tactics will be. For this you need to answer the following questions:

  • Entry point: what should happen if you open a trading position.
  • Exit Point: under what conditions you will close the transaction.
  • Currency pairs for trading.
  • Time-frame – the time interval in which you will trade.
  • Acceptable loss – for one trade and trading day.

Depending on the time frame, a short-term or intraday (30 minutes – 1 day), medium-term (2 – 7 days) and long-term (up to several months) trades are distinguished. The smaller the time frame, the higher the risk. Short-term trading on Forex is usually handled with a small deposit to earn as quickly as possible. In order not to lose the last, you should consider the sort of management of your account. On large amounts in intraday trading, only very experienced traders and banks make deals.

2. Determine the type of management

There are three types of transactions concerning trading methods:

Traditional trading. In this case, you analyze the situation on a daily basis and make decisions independently. This requires a lot of time and effort, but only in this way you can become a real trader.

Automatic trading. Managing your trading account can be given to specialized software that will monitor the situation and make trading transactions on the market for you. This type of management can be resorted to if you for a while decided to take a break from the financial race, having accumulated a substantial amount on the deposit. Any robot programs have their shortcomings – they follow only one specific strategy, are prone to becoming obsolete, they can make mistakes if the situation on the market changes radically. In a word, it’s unreasonable to rely on automation completely.

Trustee Trading and PAMM Management. Experienced traders are ready to trade for you for a certain percentage of profits if you become an investor in their account. To do this, you can transfer management of your trading account to the experienced trader or deposit money into the deposit of a special PAMM account together with other investors. The profit from trading operations will be distributed among investors accordingly the sums brought by them, that is proportional. It is essential to choose the right trader and PAMM account, which positively proved themselves. Be sure to be interested in ratings and blacklists.

3. Determine the type of trading operations

If you decide to take control completely on yourself, you will have to master all types of trading operations to implement them as needed and in combination.

  • Speculative transactions. The principle of any speculation is to sell dearly what was purchased cheaply.
  • Trading transactions. Directed simply to buy or sell goods – that is, currencies. Maybe part of speculative or hedging transactions.
  • Hedging transactions. Are conducted to compensate for possible risks from other transactions.

In general, speculative deals are made on Forex, but depending on the strategy you choose, at some point, you may need a trade or hedging transaction.

4. Choosing a Trading Strategy

A beginner should not reinvent the wheel, and it is enough to try out the successful traditional trading strategies that have been used all over the world for many years, and to take an interest in novelties. Dozens of working strategies are available for free. The most simple multicurrency strategies are TrendLines and “Elder’s Triple Screen”, they are easy to master for those who are not yet sophisticated in the game in the currency markets.

Step 4 – Choose an account and start earning millions.

In Forex, you can open different types of accounts. For the beginner in the first place, educationally is essential. These include demo accounts, where you sell virtual money, and cent accounts, on which you are conducting real trading, operating in amounts of tens of dollars. The peculiarity of the cent account is that the amount on the deposit is displayed in cents and looks more solid. The excitement of the game remains the same, but you risk at the same small sums. Developing new strategies on demo accounts and cent accounts is convenient. However, this game should not be too carried away, because when switching to real trading, you can fall into a stupor, being afraid of losing real money.

Next, you have to choose which account to create: micro, mini or classic. They differ in the minimum recommended amount of deposits. Traders usually start with micro accounts, where the deposit can be $300-1000. Some brokers do not differentiate accounts in this way and offer one type of account, which is usually called “Standard”. It is he who approaches for the transition to real trade. Other types of accounts are created by experienced traders already trading for more than one year.

How Fast Do Traders Start Earning on Forex?

To be able to talk about any stable earnings in Forex, it takes about six months to learn, and a few more months to trade. Let’s say you have shown the capacity to learn, everybody gets a handle on the fly, quickly master trading strategies, managed to work with demo accounts and go to real trading with a deposit of $500. With a stable trade with an average profit of 20% (which is a very good indicator), you will be able to double the deposit amount by the end of the fourth month. You can earn your first thousand dollars in seven months after the commencement of trade. If you want to do this faster, keep in mind that you can lose those $500 that was invested at the beginning. Take as much time as is needed, feel the taste of the game and the gradual growth of money in your account.

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