Almost all traders dream of making it big in the industry to achieve financial freedom and self-employment through profitable trading on the forex market. This means the end of the 9 to 5 jobs, no more bosses to answer to, endless meetings, and free time to spend with your family. Is all that possible through trading forex for a living?
Yes, it is possible to make a more than decent living with forex trading. However, in order to do that, you must become a profitable trader. Once you are making consistent profits, and are among the top forex traders, you stand the chance to become a funded trader with your own funded trading account. There are also proprietary trading funds, like The5%ers, who have helped numerous traders, kickstart their trading career through their funded trader program.
If you have been thinking about trading for a living, here are some of the stats and facts you will come across:
- The common claim made by people is that 90%-95% of trader’s loose in trading.
- Among the rest of 10% – 5%, there are only a few individual traders while the rest are hedge funds, institutional and banks.
- The big players rule over 90% of the market liquidity and can create movement in price.
It is important that you understand how you can trade for living, and what steps you must take to become a profitable trader. Once you are profitable, you will catch the eye of trading proprietary firms, like The5%ers, who can help you take the next step in your trading career.
Who is a Profitable Trader?
Very few forex traders manage to find consistent profitability in the forex market, mainly because of the volatile nature of the forex market. The goal of every trader is to get consistent results with their trading strategy on the forex market. This is easier said than done. The key to achieving profits on the forex trading market is by reading the market, and adopting the habits and characteristics of profitable traders. This is what sets them apart from the rest.
In general, profitable traders are those who consistently make good trades, and tend to win more trades than they lose. Therefore, making profits from their trades on a consistent basis allows them to gain financial independence.
How to Define a Profitable Trader?
There are various types of traders in the market, but not all of them manage to bring in consistent profits with their trades. A profitable trader will have in-depth knowledge of the forex market, be consistent with their trades, be focused and professional when making trades, and don’t allow their emotions to sway important decisions when trading on the market.
These are all characteristics that define profitable traders, separating them from the rest. If you plan on making a living through trading forex, you must adopt the practices and habits of profitable traders to be noticed by leading proprietary firms in the industry, like The5%ers.
How to Leverage Your Trading Skills? The Pros & Cons
Most people will disagree and think that you have a financial death wish, if you decide to leverage your trading skills. This is mainly because the traders’ failure rate in forex is extremely high. Some rough estimates suggest that 95% of people who begin trading for a living end up failing and losing all their money. The argument against trading is based around using leverage in your trading. This effectively increases your exposure to a market, but substantially increases your risk as well.
You’re not only putting your own funds at risk but also increasing the risk to the percentage you have leveraged. However, you can adopt a lot of ways to reduce this risk. The biggest takeaway from this is that if you don’t use leverage while trading, you are losing out on a lot of profitable opportunities. Hedge funds also use leverage in their strategies with great success, so there are some positive benefits you can gain from them.
To paint a clearer picture, we will discuss the pros and cons of leveraging your trading skills:
The Pros of Using Leverage
If you do leverage your trading skills, you end up maximizing your chance of making successful and profitable trades. This can be done by managing a small fund and increasing your returns exponentially. It is an inexpensive method, when compared to borrowing. There are also multiple ways you can minimize your risk through stop losses and risk mitigation.
The Cons of Using Leverage
The major downside of using leverage is that you will be increasing your risk by borrowing funds and jeopardizing the value of your position. Any decrease in value of the instrument will put you at risk of losing the entire account. This additional cost can leave large holes in the account balance over a prolonged period of leveraging your trading skills.
Options for trading in Forex for a living
For those lucky enough to become profitable traders in forex, there are various options for trading in forex for a living. There are pros and cons of everything, and we have listed some of them for good measure, so you can grasp the reality of trading in Forex for a living clearly.
Self-funding accounts are a popular choice for trading in forex, since they allow greater independence and financial freedom to traders. There are no rules that govern your trading style, you can trade with your money, meaning not following instructions of any clients. You don’t have to report or answer to anyone and you have complete freedom to take risks and adopt any trading strategy.
However, at the end of the spectrum, you will be risking your own money, and with no one to discipline you or provide you with feedback, you can make some big errors. There are no rules to follow, and when it comes to forex trading, you need discipline and an organized structure to find success. It is also the most difficult method for growing your account, since you are trading on your own.
Trade for an Exclusive Clientele
You can choose to trade for an exclusive clientele if you have been a successful forex trader in the market, which means you will be the one calling all the shots. This is a good option because you won’t be taking all the risk and will only be leveraging your skill when trading with others money. If you get good results, you can easily grow your account and attract attention from more clients.
The challenges you will face when trading for exclusive clients is that you will be constantly under the microscope and be pressured to deliver results. Your trading performance will be scrutinized and depending on that the risk and drawdown tolerance of your client may change as well. You will need to be dedicated and committed to delivering good results for your clients, or else they will leave.
Work for a Fund or Institution
Most profitable traders tend to work for a financial institution or fund, as it allows them to hone their skills, fine-tune their tactics, and earn a stable income. They have support from other traders readily available and on top of that, they will be trading with high capital, allowing them to take more risks.
The downsides of working for a fund or financial institution is the stressful work environment, having a boss over your shoulder, and the extremely competitive nature of the job. This is mainly because the goal of funds and financial institutions is to make profits, and only the best survive. Losing a couple of trades may result in you being fired by them.
Trade for Copy Trades Platforms
A lot of profitable traders tend to trade for copy trades platforms as they get complete freedom to use their desired strategy, trade at their own time, and don’t have to answer to any clients.
However, this also makes it difficult to stand out as these platforms can be easily manipulated. You will only be paid for a share of the spread, not the profits you bring through your trading.
Trade for a Prop Firm
The best choice in our view for profitable traders looking to trade for a living is to join a proprietary trading firm, like The5%ers. Trading for a prop firm or prop shop is extremely popular among traders. It allows you to trade at your convenience, with no boss over your shoulder. You also have the freedom to trade with your strategy, trade with high capital, and stand the chance to steadily and exponentially grow your income.
The Bottom Line
If you plan on making a career in forex trading, your primary concern should be to find consistency in your trades. This will set you on the path to becoming a profitable trader. The success rate for traders in Forex isn’t the highest, but if you’re determined to trade for a living you must do everything you can to become a funded trader for a proprietary trading firm like The5%ers.
Photo by Jon Tyson