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If you opened this article to find a sure way to riches using the international currency market, you might as well go away now. You must at all times understand, that there is no sure way to riches anywhere, let alone Forex, which is a very risky market, and without proper education, you will probably lose your money.
However, there is one – and just one – thing that will, if applied properly, allow you to increase your capital in a steady manner, allowing you to compound your way to a nice financial future. That is money management. You should always be aware of what you’re risking on any given trade, and you must make sure that a losing trade will not destroy your account, in fact, your account should not suffer more than 2-3% drawdown if your prediction about market movement was wrong. If you are applying this principle, then you are already on the right course, and there’s not much more to tell you – any more or less sane system will work.
As I like to put it, the best way to earn money in Forex, is simply not to lose it. Winnings will happen, and compound interest will just take care of the rest.
The main problem with beginning traders is impatience. Professionals in Forex market agree, that an average monthly return of 4% is attainable and reasonable goal. And of course, if you are trying things out using a starting capital of let’s say $1000 (which is absolutely the right thing to do – start with small amounts), 4% equals 40$. Not much, right? And that is where new traders get impatient and start risking more to gain more, forgetting that they also increase not only their chance to earn more, but they also increase possible losses.
You should always look not at the total amounts you make, it doesn’t even matter how big your account is, but instead, look at the percentage you’ve increased your account. For example, 4% of $1000 is just 40$. But think about it – if you patiently have increased your account to $100,000 – 4% is $4000, which is a nice amount of money, right?
So, here’s a recipe on how to earn money in Forex – apply money management, always be aware on how much of your account you are risking, and be patient. Compound interest will take care of you then. 