You’ve heard about the various success stories in the forex market, right? Some guy on YouTube or Facebook posted that they were able to transform their $1,000 into half a million. Just imagine, you can earn that kind of money without having to deal with other people, sell goods, or even recruit. So now you’re probably thinking, “Hey, this forex thing is perfect for me! I can’t wait to try it out.”
Before you do that though, try to ask yourself, “Is forex REALLY for me?”
You see, out of all the winning traders that you see on social media, there are also a huge number of failing traders. In fact, statistics show that 95% of retail traders lose money. This means that only 5% of traders are profitable.
Does that mean forex trading isn’t for everyone? Does that mean forex trading is actually a craft that only a few, selected individuals can succeed in? We’ll be discussing that in the next few sentences.
Can Everyone Trade Forex?
The first question that pops into mind when starting out with forex is whether everyone can do it or not. The quick answer is yes, anyone can do forex. All you have to do is choose a good broker such as Nextmarkets, open up the chart, look for a pair you want to trade, and then decide whether you buy or sell. Sounds pretty simple, doesn’t it?
Here’s where the more complicated part comes in – the timing of entry. When you execute a trade order, you are buying or selling a currency pair at a certain price level. From there, the price can either drop or rally depending on whether the buyers (bulls) or sellers (bears) have more control. If you want to ride with whoever has control, you need to learn how to read the chart and news.
With that in mind, the next question would be, “Can anyone learn forex analysis”. Again, the answer is yes. Just like any other skills, market analysis can be learned. There are so many online lessons, mentors, and articles out there that can help you hone your skill.
That said, the simple answer to whether anyone can do forex and be profitable at it would be YES.
Can Everyone Take Forex?
This is the aspect that separates the winners from the losers in forex. Even if you have done your research on brokers and have found a good mentor, you must ask yourself whether you’re willing to take the hardships of forex trading or not.
The forex success story you see on YouTube or Facebook can either be two things: a scam trying to sell you fake lessons or a product of years of training. Let’s talk about the latter. All very successful traders didn’t make it there by accident. They all went through the heartaches of learning how to understand the market and they all learned how to control their emotions.
When you learn forex, you will be losing a lot of money at the start because you need to fail in order to learn. Aside from that, you’ll also go through all the frustrations of trying to figure out why your strategies didn’t work and how to improve them. In a simple sense, forex isn’t easy. You will be given a set of tools and strategies by your mentor and you have to find your own way to use those tools based on your personality. Mentors would usually teach their students how they trade and let the students emulate. However, student traders would eventually have to branch out and find their own way of doing things.
The last and most crucial thing that successful traders have learned to control is emotion. Fear, greed, hesitation, and insecurity are all emotions that can cloud your rational judgment and kill your trade. Successful traders have already mastered those emotions which is why they can earn consistently.
So as a beginner, are you willing to lose money at the onset, learn from your failure, make your own style of trading, and master your emotions? If not, then forex probably isn’t for you.
Now, the answer to the question, “Is forex trading for everyone?” is more dependent on one’s personality to take the rigors of the activity rather than the capacity to learn it. You have to have a pretty strong will if you’re going to take on forex trading. Otherwise, you will eventually give up. Of course, you can always develop that strong will if you really want to take up forex trading. Although forex trading may not be for you in your current state, things could change in the future.
Signs That You Have What It Takes to be a Trader
Not sure if you have what it takes to trade in the forex market? Here is a short checklist to help you out:
- You analyze things rationally.
Analyzing the market is all about logic. What you are trying to understand is the overall sentiment of the market with the help of indicators and other tools. You are trying to understand the trend and the main direction of the minds in the market. You have to approach this logically.
For example, in forex, we usually use a trendline in a higher to analyze the long-term direction of the trend. If you have an upward trendline, then obviously, it means that the trend is upward. If the price broke out of the trendline and is now below the trendline, then it means the direction is possibly switching. If the price somehow tries to go back above the trendline but can’t, then it’s a confirmation that the direction has changed.
With these tools, you need to use logic to analyze market movements.
- You are systematic.
If you are a systematic person, you won’t break your trading system no matter what. Trading is all about having a system because you need to set rules on yourself if you want to be profitable. If you can stick to your system rules like glue, then you may find trading to be suitable for you.
- You are in control of your emotions.
As mentioned above, you have to know how to control your emotions. The 95% of failing traders usually let their emotions rule them which is why they get clouded from rational analysis.
- You are okay with failure.
Also as mentioned above, you will be failing a lot, so you have to know whether you can take that volume of failure or not.
- You are not easily influenced by others.
You may be tempted to go against your trading system because an article said that it’s trading in the other direction of your trade. Sure, this person may be an expert, but he or she is probably using another strategy that’s different from yours. You have to be able to stick to your guns no matter what. If you lose, then learn from it.
- You are willing to learn.
Finally, you have to be willing to keep on learning. Always remember that forex trading is an art that you will have to keep on learning until the day you stop. As long as you’re willing to keep on learning, then you’re on the right track.
The Bottom Line of It All
The bottom line is that if you want to trade in the forex market, you have to know whether you can take it or not. The checklist above can tell you whether you can take trading or not. Now, if you scored lower than 3 out of 5 in that checklist, don’t be discouraged. All you have to do is try to improve on the areas where you didn’t score. If you can do that, you can actually prep yourself for trading.
Do you think you’re now ready to trade? Then we suggest that you start looking for Cologne and Malta Based Operator as your broker. Brokers such as Nextmarkets are known for their reliability and transparency when it comes to dealing with their clients.