How profitable Forex trading is and how much you can lose on it?

As pretty much everything in the financial world, Forex trading might sometimes get quite risky and make you ask yourself if that was even worthy to start trading in the first place and if Forex trading can be profitable at all. However, even those traders that have made trading their main source of the profit gaining experienced losses before, and they actually still do. But, the risks, in that case, are justified. As after all, trading is a process that is learned after a long path made of mistakes and is compiled from experiments.

Therefore, the one shall be ready for the probable losses and shall educate him/herself about the risk management. However, the fact that the market is still operating and the overall cash flow of it reaches around $5 trillion per day itself might prove that Forex trading can be successful and profitable. But it shall be studied and analyzed well at first.

Things being said, it might be better to ask yourself if you are the one who can handle certain struggles and learn how to trade profitably on Forex. Because you can rather succeed in gaining the profit on Forex or expect a loss. However, gaining profit by Forex trading is definitely something possible and achievable. Overwise, the platform would have just faded away and completely disappear with the time.

Important things to consider while Forex trading

Now let’s imagine there is a middle-aged trader Jonathan who started to trade only a month ago. He wants to start making serious money out of trading and desperately needs to get the answers for his main question ‘Is trading on Forex profitable?’ What we gonna do is we will give Jonathan several easy guidelines that might help him out. Notably, those strategies, pieces of advice, as well as restrictions, can if not diminish, but at least minimize the possible losses for Jonathan, and for you as well.

So, there you go:

Smart and consistent trading strategy

The trading strategy might appeal as various random things for different people. However, the strategy must still be something you can stick to and something that will keep you disciplined. That will also ensure you are not asking ‘Is trading Forex worth it?‘. You will just start making money and gain a stable profit out of it. Therefore, your strategy might be based on trading of the specific currency pairs, or of trading certain currencies on the various markets, that totally depends on you.

Ideally, the Forex trading strategy shall indicate what will be your target market, what will be the largest risk taken, what are the enter and exit points, as well as trading tactics that might include the platform and special tools selected.

Long story short, let’s now look at the factors that compile the successful trading strategy. And count down the things you, as a beginning trader, should avoid at any costs.

Wise investments

Jonathan is a risky guy, he knows what he wants, but does not necessarily know how to reach it. Even though that might be good to go for risk from time to time, but that risk shall be all times justified! The main rule for successful trading is to limit the Forex trading risk for up to only 2% per one trade. That way you can make sure that the losses that might appear won’t affect your standards of living.

Even though it might seem like an easy thing for Jonathan to do, but limiting the risks mean limitation of the money spent on trading as well. This might sound ridiculous, as who would want to spend more money on such an unstable thing as Forex trading? However, there are plenty of people who claim that more they invest-more they will get as a result of the trade. But, unfortunately, that is not always the case necessarily. There are tons of books telling the stories of successful brokers losing all of the funds that they were acquire for years and years in only one day.

The trading shall also not exceed 20% of the total capital of the trader. Jonathan shall not expect the Forex trading to become its main source of the profit gaining in the nearest couple of years. The wise thing for Jonathan to do in order to start trading profitably is to create a demo account first and to try trade without spending actual money. That is always better to start small, that will allow you to go far over time.

No impulsive trading

That is the main thing for our trader Jonathan to avoid. The Forex trading is profitable only if you rely on the statics and your previous trading story. That is a huge no-no for traders to justify the trading by the emotions and other cognitive factors. That is a sphere that requires a cold heart and a fresh mind.  The stop-loss tactic, we will speak about further, was implemented with the purpose of allowing traders to acquire the full control over the possible losses and ban emotions from gaining excessive influence over the decisions. Each trade shall be thought out in advance and analyzed in details.

The key for successful trading for Jonathan, so as for you, dear reader, is emotional discipline. No matter if things are going great or not, you shall never allow your emotions to intervene in your decision-making abilities.

Best way to trade profitably

In order for you to start trading profitably, Jonathan needs to first understand, that there is still a high possibility for him to bear losses. However, the main question is whether Jonathan, so as you, will stop on the path to reaching the aim? If the answer is no (which it should be) and you are still interested in how to earn a profit in Forex trading, then keep on reading as below you will find main pieces of advice for the successful Forex trading.

Well, of course, generally saying, the concept of the profitable Forex trading is buying for less and selling for more. It sounds pretty is, right? But is it that easy in real life though? Let’s see.

A stop-loss tactic

As mentioned previously, you shall always stick to the plan and limit the amount of the possible loss so it wouldn’t harm your standards of living. That being said, we would like to go back to the stop loss set. That basically allows you to set your own limit of the loss acceptable for you. Once it is set, you are pretty much secured against any force majeure to happen. Notably, that is also often called ‘money management’ by some experts. The word speaks for itself, the setting allows you to manage your own budget and not let any market fluctuations to harm it.

That is human nature to feel superior when gaining profit and to feel defeated when experiencing loss. Here is where the losing limit makes it possible to ensure that we won’t lose more than we can allow ourselves to.

Even though the limits might be changed over times and depending on the markets the trading is done at, it is still recommended to stay away from increasing it during the first couple of months of trading.

Keep your emotions aside, always

Sounds obvious, but it might get hard sometimes not to fall for the ‘game’ and go all in. You shall always remember, as, for the trader, your emotions are your worst enemy! In order to maintain a maximum profit out of Forex trading, you need to be as rational as possible. As Forex trading is a mixture of analysis and discipline, it does not have any place for games, even though it might be considered as one sometimes.

Keep yourself up-to-date with the market changes

In order to gain profit on Forex, you shall always keep yourself updated with the most recent news. As those are the ones affecting the exchange rates. So, make sure you are checking Forex news calendar regularly and using other Forex trading tools that will simplify the trading for you a lot. After the economic calendars update the dates of the upcoming events or highlight the ones that already happened, you can easily make certain predictions about how the currency exchange rate will change in the foreseeable future. Thus, you can start planning your portfolio in advance in order to trade as profitably as possible on Forex.

Using Forex signal providers might also help you out while finding out how to trade Forex profitably. The signal providers are, generally speaking, the tools that would allow you to decide whether to buy or sell any particular currency at the present moment and how to use Forex trading for maximum profit. Those might be as free, so as paid ones. Moreover, the signal providers shall not always be a platform or any tool, it may also be a piece of news that might make you make a particular trading decision. Among the most popular and trustworthy signal providers, there are JKonFX, DDMarkets, 1000pip Builder, Forex Mentor Pro, Daily Forex, etc. However, that is important to use the signals timely, as if you will do that late, you might simply lose the profitable trade.

But hey, now let’s go straight into the topic of the article of what is Forex trading profit per day and does anyone actually make money trading Forex. 

How much money can you make trading Forex

Generally, the amount of your daily profit depends mainly on the size of your deposit, as well as your trading size. Thus, simply saying, your profits can increase with the increase in the funds spent on trading. But so as can the losses. Forex is known for being space with an unlimited prospect for as losses, so as for profits. That is a so-called game of probabilities, you never know how the market will evolve. So, that is always up to you, whether to take out the money from the trade or to stay in and maybe gain more.

Everyone who starts trading online is interested in whether the Forex trading is still profitable and if yes, how to get profit in Forex trading.

Your daily/monthly profit depends on a number of factors. Those might be your knowledge of the Forex market, the type of market you are trading at, the amount of time you put into investigating the topic and analyzing the Forex market changes, and, of course, how much money you put to start with. Thus, if you invest, for instance, $2,000, you will receive far less profit than the one who invested $20,000. But, keep in mind that it is highly recommended not to invest more than 2% of your portfolio. As after all, trading on Forex is not necessarily about gaining large profit but to rather keep yourself from losing much.

So, is online Forex trading profitable? Well, yes, if the strategy is throughout out well and implemented efficiently on practice. To make things a bit clearer and precise, let’s go back to our trader Jonathan. Let’s say, Jonathan has somewhere around $6,000 of funds available on his account and he decided to put the loss limit for only 1% at first, that shall equal to a maximum of $60. Depending on the currency pair traded, Jonathan can expect $10 gain/loss in case if he decides to trade a standard lot, $1 if he is trading a mini lot, and $0.10 if that is a micro lot. The currency pair chosen would be EUR/USD, as it is believed to be quite a stable one.

Okay, now let’s say, with 7 pips, Jonathan can trade 8.5 mini lots, which will result in $59.5 of risk per trade. Notably, that is less than Jonathan’s 1% of risk ($60), right? Then, in case of a 10 pip position, a win will equal $10, and $7 in case of a 7 pip loss. Therefore, let’s say of Jonathan will operate around 5 trades per day, that is 100 trades if Jonathan will trade 20 days out of 30 in a month.

By simple calculations, keeping in mind that the percentage of win will be equal to 50% per month, we can come to the conclusion that if 50 trades were profitable, and 50 were not, the amount of profit might reach $4250. Meanwhile, a loss might be $2975. So, Jonathan’s net will be estimated to be $1275.

However, there are certain expenses connected with the brokers’ taxes that might range from $0.2 to $0.5 per a transaction. Therefore, maximum tax expenses will equal about $425. After paying brokers’ commissions, there will be somewhere around $850 of the pure net left. The calculations of the taxes are the following: 100 trades x 8.5 micro lots x $0.5 = $425.

Of course, those calculations cannot predict your personal profit for the month. However, they can show you what might be the logic behind the profit calculations. The pip calculators might also help you our while calculating the expected risks, returns, and pip values.

Bottom line

Things being said, that is always hard to predict what the Forex trading profit will be per day, as it depends on various factors. Therefore, the experts even came up with such a thing as ‘slippage’ that leaves a place for unpredicted loss. It might be easily calculated by reducing additional 10% from the net profit.

By maintaining discipline and proper strategy, you can reach about 10%-15% of return by the end of the month. However, still, you need to be prepared for the possible losses to happen. Even though Forex market appears as a great place to gain profit, it is hard to predict how the market will evolve and what the exchange rates will be in the next couple of weeks even.