Forex Trading for Beginners: Is Forex Trading Profitable?

Created: 17th August 2022

Forex Trading

Before learning to trade a certain market, it’s important to do your research and figure out if it’s the right market for you. For help on this, read this article on the best markets to trade. One question you’ll naturally want to ask “is this market profitable?” After all, for most people, trading is purely about making money from the markets.

But of course, all markets have the potential to be profitable if you learn how to trade them with the right approach. Some markets might have more potential than others to help you make a lot of money. But at the end of the day, it comes down to one thing: do you know how to trade that market to make a profit?

People often ask: is forex trading profitable? This is because forex is the largest, most actively traded market in the world. So, whilst there are huge opportunities for profit, there’s also a lot of room for loss. So… is forex trading profitable? Read on to learn more.

How much money can I make from forex trading?

If you’re just starting to learn how to trade forex, it’s natural to ask how profitable the market is. Of course, there is plenty of opportunity to make profits in the forex market, or people wouldn’t trade it. Forex pairs can move 50 to 100 pips or even more in the space of a day or less. So, depending on how much you trade per pip, there is the potential to make great profits. For example, trading at £3 per pip and making 100 pips on a trade makes you £300. Or trading at £5 per pip on a 50-pip winner that happens in a few hours is worth £250.

And forex markets can see big trends, where a currency pair may move many hundreds or even 1,000s of pips over the space of weeks. Catch some of those and you can make serious profits.

However, how much profit you can make will depend on your skill as a trader and the strength of your strategy. At Trendsignal, we specialise in providing strategies and courses that can help you to succeed as a forex trader.

Forex requires practice, a cool head, a decent strategy, good methods for reading the markets, and dedication. Forex traders that know how to apply the right strategies can find the forex market very rewarding. So, instead of jumping in with both feet, you should invest small amounts while you find and get used to your strategy, rather than trading with big amounts. To start trading forex, you should have at least a basic understanding of the currency market. Take your time and do your research!

Forex Trading

If you don’t know where to start, consider a trading course. A quality trading course can help you figure out the markets before you start trading with your own money. A good course can also help you to be profitable sooner, learn how to manage your trading risk and win bigger profits in the long run. For example, our Trendsignal Plus course is aimed at teaching you how to swing trade forex, indices and commodities. 

Managing risk in forex trading

One of the most crucial parts of ongoing profitability when trading forex is risk management. Every successful trader learns to manage their risk.

To start off, keep your risk on each trade very small. Risking 1%, 2% or even less of your trading account per trade is typical. This means that if you have a £2,000 account, you should try not to lose more than £20 (1%) on one trade. This might seem like a small number, but losses can add up – and if you have a larger account these numbers can rack up even quicker.

Forex Trading

One of the best ways to manage risk is with a stop loss order.

What is a stop loss order in forex?

A stop loss is a trading parameter you set to establish the closing price of your trade if the market moves against you. With a stop loss order in place on your trading platform, once the stop loss level is reached, the trade will then be closed at this level automatically. In theory, it means that once you place a stop loss, you can rest easy in the knowledge that you won’t lose any more than you’ve planned to lose if the trade goes against you.

However, stop loss orders don’t always work exactly as planned. Sometimes, the forex market – as with all markets – has what are known as price gaps. It’s when you get a large move that goes beyond your stop loss level. When these happen, your stop loss won’t be executed at the level you set it at, but instead at the next available price. This is what’s known as slippage.

Forex Trading

What should my forex win rate be?

Your “win rate” refers to the number of trades you win versus how many you lose. So if you’ve placed 10 trades and won 5, you have a 50% win rate. Clearly, a higher overall win rate gives you more risk/reward flexibility, and in turn a high risk/reward ratio means that your win rate can be lower and still remain profitable. What is a risk/reward ratio, you might ask?

Well, risk/reward refers to how much capital you’re risking in order to gain a certain profit. For example, if a trader loses on average 10 pips on their losing trades but makes 15 on their winners, they are still profitable even if they win only 50% of their trades.  Of course, what you’re looking for is low risk/high reward, but this isn’t always feasible.

So, is forex trading profitable?

Just like every other market, there’s room for profit and loss when trading forex. The best way to help yourself be profitable is to ensure you know what you’re doing. If you start trading with no strategy, you’ll find it harder to make decent profits. This is where investing in a trading course can help.

Developing profitable forex trading can take many months or even years with no one in your corner to teach you how to do it well. At Trendsignal, we offer trading courses for everyone from beginners to experienced traders – because everyone can learn something new and achieve their goals.

Let us help you figure out forex before you dip your toes into the market alone. Our trading courses provide you with proven, simple trading strategies and key information about market trends and indicators. We’ll also show you how to analyse the forex charts so that you can build your own profitable trading plan. You’ll benefit from our experience in trading the financial markets, which we pass on to our customers through interactive workshops, seminars and one-to-one coaching.

Forex Trading

We’ll help you start forex trading and meet your goals. If you think our courses could help you, contact us, enrol now, or watch a free webinar by clicking on the button in our menu bar.

Category: FOREX TRADING