How To Make Money In Forex

Foreign Currency or as is called, Forex trading is where you trade the value of one currency pair against the value of another. Let’s use the Great British Pound (GBP) vs. US Dollar (USD) as an example. I’ll use a trading amount of $1000. If your analysis revealed to you that the Pound was going to increase in value compared to the Dollar, you could use all that $1000 to buy Pounds. When the value of the Pound increases in value by say 5% and you are happy with that profit level, you can sell for a profit of $50.

(This post contains affiliate links to 1000 Pip Builder. Which means that if you click on this link to the 1000 Pip Builder’s site and subscribed, I may earn a commission.The price you pay will be the same if you went to the Merchant’s site directly.)

It may seem risky to use all of that $1000 on one trade. And you would be right. The Forex market has a leveraging system where you can use smaller investment amounts to control large amounts of money. It is the use of Stop Loss and Take Profit setups in trade that when used with good risk management, one can limit one’s loss exposure. Hence, it is possible to make a lot of money over time using a small investment.

I have oversimplified the process just to make a point. The same principle applies to trading stocks. The object is to buy low and sell high. If it was that easy to predict the direction of the market. Everyone would be trading. But it is not.

Although you can use all kinds of analysis and chart patterns to help use past history to give some idea of future direction, nobody can be absolutely certain what the outcome will be. If comes down to how good one is in analyzing the markets and using sound principles to make trades.

I am going to introduce you to a site where you can learn the basics of Forex trading.

Why should you consider trading Forex? Here are some reasons:

  1. The Forex Market is open for trading 24/7 except for weekends when it is closed for 48 hours.
  2. It is by far the largest market open to trading hence there is no liquidity issues.
  3. Most trading companies will give you a free demo account to do paper trading before you dive in with real money
  4. One lot size is equivalent to about $10 a pip. Though one can trade using micro lots, meaning as low as 10 cents a pip.
  5. The amount risked is limited and is defined by where the stop loss level is placed. If the lot size used is a micro lot equivalent to 0.0 (10 cents a pip) and the stop loss is set at 100 pips, the most you could lose if the trade goes against you is $10. Hence, you can control one’s risk. Risk management is the most important skill of any form of trading.

How To Trade Forex

1) Do It Yourself

It is paramount that you learn as much as you can about the technicalities of trading as well as the personalities of the various currency pairs. Many Forex trading companies will allow you to open a demo account for free to practice first before you make a deposit to open a cash account.

Even after you open a cash account, it is advisable to continue one’s demo trading and gradually start to use real money in very small increments.

2) Done For You

In this scenario you join a trading company for a monthly fee to have access to trade recommendations made by experts. You will get details of trades to make typically one or two a day. These details will provide you with all the information to execute a trade with your Forex brokerage company. You will be told the currency pair, what stop loss to place and what take profit to set. The amount you use will depend on your trading capital and what you can afford to lose.

Even when you go this route it is still prudent at first to make these trades using a demo account. Once you feel confident that you are making a profit on average, then start with real money. But start with micro lots. Then move to mini lots.

Risk Management

The most you should ever risk on one trade is 2%. So for example, if your capital was $10,000, 2% would be $200. Hence, you would be eligible to make trades where you risk no more than $200 per trade. Meaning you can place a single trade using 2 lot sizes and set a stop loss no more than 20 pips. If the trade required a larger stop loss then the lot size would have to be reduced.

Ideally it is best to limit one’s loss on one trade to 1%.

There is more to risk management than how you set your stop loss. If it is clear the trade is going against you, it is OK to get out of the trade before the stop loss is reached. Conversely, if the trade is moving in your favor, you can reduce the stop loss till you eventually set it to break even. In that situation if the trade went against you there would be no money lost.

Risk management is an art and a science. Every trading company has training modules on this very important subject. If one minimizes one’s losses to small amounts, it is possible to suffer a string of small losses and come out ahead with one big profit run.

Each individual has their own style of trading. This is usually developed while demo trading.

Trading System

There are so many ways to trade. It is best to try as many methods out as possible during the demo trading period. The goal is to find a system where out of 100 trades you make a profit that meets your goals. Say for example, that profit goal is 1% per trade and stays that way consistently, then you have developed a system.

So if you have only $1000 to invest per trade and on average you earn a profit of1% on every 5 trades that you can sustain for 100 trades you will earn $200, This is a 20% return on capital. However, the benefits of a successful system is it can be scaled up. If your capital was $10,000, after 100 trades your earnings using the same metric would be $2,000.

There is one major takeaway. Your success or failure is based on your own efforts. There are no guarantees. However, by following the advice of expert traders the probability of success is higher than if you went it alone.

1000 Pip Builder

This is the company that is perfect for beginners. Here is what they have to say:

 

Join 1000pip Builder Now by Clicking the Panel Below

You will be provided with several subscription options. Pick one that is right for you. The important goal is to start learning about Forex Trading right away so that you can learn to become successful at it to help you replace your day job.

Just imagine, trading for a couple of hours a day or night, from home instead of driving to work, fighting the traffic and working for 8 or more hours to make someone else rich.

However, by joining 1000pip Builder you have the option of using the trading signals they give you to start making a profit right away. I would still recommend that you learn to trade yourself so that you do not become dependent on others as well-meaning as they are.

For transparency, if you join 1000pip Builder as a paid member I shall receive a small commission to help support my website. The cost will be the same regardless if you went through my site or directly through them.

Forex Brokers

Selecting a Forex Broker is something that you must make a decision for yourself. You need to research Forex Brokers to find one that meets your comfort zone. However, I shall provide you with a couple of suggestions to give you a starting point.

Oanda and Forex.com are both reputable brokers. They both offer the well proven Forex Trading Platform, MT4. Click the banners below to check them out:

Oanda

 

Forex.com

Click the Banner below to get to their website.

 

Closing Thoughts

I highly recommend that you check out the world of Forex Trading if you want to create a means to add extra money to your life every week. This is a fantastic alternative. You can start with a demo account and do paper trading. As you demonstrate to yourself that you can make consistent profits either with you trading or using the trades recommended 1000pips Builder, you will be entering a new world of financial freedom.

The beauty of this journey is you start with paper money. Then graduate to small cash accounts. Once you prove t yourself that you can come out ahead every month, move up to even larger cash accounts to trade. If you have any questions please leave them in the comments section below.

I wish you much success in your Forex trading activities.

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20 thoughts on “How To Make Money In Forex

  1. bernie Reply

    I cannot stress how important this information is for all of us traders out there. It is amazing that there are people like you sharing information like this, I always wanted to learn a system of how to create more money and I think I have just found one…Then all I have to do is do it again and again and again…I could never manage to build anything like this on my own.
    I wish you all traders out there good luck with this trading!

    • Edwin Bernard Post authorReply

      Hi Bernie,

      Sounds like you’re a trader. Do you trade Forex? Are you familiar with any of the sites I provided in my article? 

      If you decide to check out any of these links please let me know your opinion.

      Cheers!

      Edwin

  2. Rodarrick Reply

    I agree with you that trading forex can really prove the difference when it comes to making money online or adding extra income, though it comes with a lot of stress too. However, I feel that forex, if well studied, can really prove to be the game changer. Thanks so much for sharing all these here. This 1000pip builder seems interesting and I will look them out.

    • Edwin Bernard Post authorReply

      Hi Rodarrick,

      Glad you’re going to check out the 1000pip Builder. Let me know what you think. 

      Cheers!

      Edwin

  3. RandalvS Reply

    I know that trading in forex can be complex if not well explained. Thank you for a very insightful post. The simplification makes it easy to understand the principle. The detail is good and well structured. You don’t just offer a product but give good advice on the pitfalls and risks of trading. The reader is also given a sense of security with well-defined tools for the trade. Thank you for a good post. 

    • Edwin Bernard Post authorReply

      Hi Randal,

      Thanks for your constructive comment. Do you or have you traded Forex before? I’d love to know more about your experience.

      Cheers!

      Edwin

  4. Love Yourself Reply

    The stock exchange is always something that I have been very interested in, but honestly, been absolutely terrified of at the same time because it seems so incredibly complicated.

    However, your article has been incredibly informative and you have simplified the process – making it very understandable and quite frankly, very interesting.

    This is something that I would certainly be keen to learn about through your website, and once I felt confident, would like to try.  Who wouldn’t like an extra income?

    Thank you once again,

    I will certainly be back for me information

    Kind regards,

    Renée

    • Edwin Bernard Post authorReply

      Hi Renée,

      Thanks for your supportive comments. The Stock Market is very different to the Forex Market. I think it is less intimidating as we only need to consider a handful of currency pairs instead of thousands of stocks in the Stock Market. I hope you can take the time to find out more by checking out the first link about Baby Pips. 

      I wish you all the best. Much success to you.

      Edwin

  5. Nimrodngy Reply

    Thanks for providing such an honest review and for the precious explanations given.

    I was trying to build and online business in order to generate passive income. I found a lot of fake information with all types of scams. I don’t have very much knowledge about trading, but it seems very attractive. You gave me a confident reason to try it. I think that the best way to start this activity is with the demo version how you have suggested.  

    How much it takes to go with this demo version and paper trading until we feel prepared for this journey? 

    • Edwin Bernard Post authorReply

      It doesn’t cost anything to set up a demo account. The Pipsology site is free to join. I suggest you read about several trading strategies. Pick just one to experiment with in your demo account to see what works for you. I suggest looking at day trading options using the one day chart. Then the one hour chart.

      Keep demo trading using strategies you can find at any one of these links until you make consistent profits. Only then open a cash account and start with small trading amounts until you make a profit. 

      I hope this helps.

      Edwin

  6. KingAndrea Reply

    I’ve read a lot about forex and I’ve come to the conclusion that I’d really love to invest a bit into it. I understand the fact that as much as it can make you money, it can be so risky to engage in, so this calls for an advanced touch like a training prior your investment in order to be able to know the in and out of the business. I’ll definitely use this article wisely, I’ll pick up some tips from it. Thanks.

    • Edwin Bernard Post authorReply

      Your assessment is on point. Your concerns are valid. That is why risk management is the most important factor in Forex trading. In basic terms it means to never expose any one trade to a loss of more than 1%. In real numbers it means for a capital of $1000 if a trade goes against you, the maximum loss will be $10. However, the minimum profit will be 5%. Meaning $50. So you’re risking $10 to make $50. And if the trade goes in your favor, the profit could be much more. 

      Good risk management requires discipline in using a proven system that allows you to come out ahead even if you have more losses than wins. Losing is part of any trade. It has to be expected and managed.

      The biggest reasons why people loose big is they ignore the rules of risk management. Nobody likes to feel they were wrong. If they see a trade going against them, they convince themselves it will turn around. So they increase their stop loss margin, incurring losses that go beyond their initial 1% limit. What should have been a 1% loss ends up at 10% or more. At which point they exit the trade in panic. 

      A few bad moves like this could wipe out ones account. This is what I mean by discipline. It is the ability to take a 1% loss even if they see the trade turn around after they exit. In the long run they will come out ahead. 

      Do you see where I’m coming from? I know. I was one who let discipline lapse and lost my shirt. I know better now and don’t want those who I introduce to Forex to make the same mistakes I did.

      I wish you much success in your Forex adventure.

      Cheers!

      Edwin

  7. Bella Reply

    This is a good one and thoughtful of you to share. I trade forex but by investing in people to help carry it out and then split the profit with me. Learning and trying it out had left me almost bankruptcy some years back. But now, I feel more at peace consulting the help of others. However, risk management should be a course of learning on it’s own because everyone must understand it well to avoid burning money out. Good one

    • Edwin Bernard Post authorReply

      Bella, you are one wise cookie! You got this. I just responded to another person who responded on the importance of good risk management. 

      I made my mistakes. Not once, but often. Until I read another trader teach it is ok to have more losing trades than winning ones. As long as the losses were kept small and the winners were kept big. 

      Thanks for your words of wisdom.

      Cheers!

      Edwin

  8. Alblue Reply

    Oh thank you for giving some useful insights on the basics of forex trading. I’ve been thinking about making some additional money with financial trading such as stock or forex, but I need to learn the basics before choosing which one is more suitable to me. Do you mind explaining what is the benefit and disadvantage of forex trading against stock trading? Thanks

    • Edwin Bernard Post authorReply

      Thanks for your comments and asking a great question. Investors and traders make and lose money in both stock and Forex markets. Here are a few reasons why Forex is considered the better option. 

      1) Several thousand stocks compared to about 12 major currency pairs means you can do more effective research in Forex with the same amount of time. There are fewer elements to worry about. 

      2) The Forex market is open 24 hours a day, compared to the Stock Market. Trading Forex can fit more easily into your daily schedule.

      3) Daily trading volume in Forex is 5.1 Trillion Dollars compared to $84 Billion for stocks worldwide. There is no problem with liquidity. It’s easy to get in and out within seconds. Even within a fraction of a second.

      4) Since trading can be done in micro lots, you can trade with an account as small as $200. If you don’t risk more than 1% on any one trade, the most you can loose with a $200 account is $2, 

      5) Using sound and disciplined risk management it’s actually less risky to trade Forex compared to stocks.

      These are the top 5 reasons for me to trade Forex compared to stocks. What do you think?

      All the best to you.

      Edwin

  9. Rutz Reply

    This is something that has been done for me for the last four or so years and I must confess that there have been loses here and there.  Nevertherless I have never done it myself.  May be this is the time I should start.  Thank you for the enlightment.  I am also checking on the 1000pip Builder. 

    • Edwin Bernard Post authorReply

      I wrote quite a bit on risk management to others who made comments here. Please check those out to learn how to minimize losses and to let profits soar. Don’t give up. Learn better psychology and you will do well.

      Cheers.

      Edwin

  10. Wildecoll Reply

    The mistake most traders make is jumping into trading without even practicing. Kinda true that forex trading is really simple and straight. But to the outside world, it can be as technical as ever. I’ve heard of so many testimonies of multimillionaires who made it in forex, what matters most is the understanding. It was nice that you shared how to trade, it’ll be of help.

    • Edwin Bernard Post authorReply

      Glad that you supported my rationale for trading. Sounds like you’re doing great. I wish you continued success.

      Cheers!

      Edwin

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