How Long Does It Really Take To Be A Profitable Forex Trader?
If you are considering embarking on a forex trading career, at some point you are inevitably going to wonder just how long it will take to start generating steady profits. You naturally want to know when you will be able to reap the rewards of all your hard work and commitment, and it’s a perfectly valid question to ask.
It’s important to have realistic expectations from the outset, so that you can set yourself clear goals and avoid becoming too disheartened along the way. Anyone who thinks that forex trading is a good ‘get rich quick’ scheme will sadly soon find that they are mistaken.
OK, so fluke trades or beginner’s luck might land you a decent profit once or twice early on in your career, but few inexperienced traders will be able to sustain this for any length of time. However, assuming that it takes years and years to turn a steady profit from your trades is also a rather dispiriting prospect. So how long will it really take to get good results?
This might seem to be a rather frustrating and evasive answer, but the truth is: it depends. Here are some of the main factors that will influence how quickly you can expect to become a successful forex trader.
How much time you have to devote to trading
The first and perhaps most obvious point is to consider how much time you have to spend on your forex trading career. If you are lucky enough to be able to devote the majority of each day to learning the ropes of forex, you are going to be in a position to start making live trades much sooner than someone who is a weekend or evening trader.
That said, some people are incredibly focussed and fast learners, while others are slow but steady in their progress. It is not just a question of how much time you have to give, but also how well you spend that time. You might be familiar with the saying that ‘work expands to fill the time available.’
It was first coined by Cyril Northcote Parkinson in 1955, and it succinctly describes the phenomenon that most of us will have noticed in our own behaviour at some point in our lives.
For example, when you were at school or college and you had a whole weekend to finish an essay, you may have become sidetracked with irrelevant details, or just worked in a more leisurely and meandering way because you knew that you had two days to complete the work.
However, if the deadline was at 9am the following morning and it was 5pm on the night before, you probably knuckled down and nailed the key arguments of the essay much more quickly. There is even a chance that your work was punchier and more to the point as a result.
The same theory can be applied to learning forex. There is no denying that it is a huge and complex topic, and even successful and experienced traders accept that they will never know everything about it. As a newcomer, it can be easy to become bogged down with learning reams of theory and technical detail.
While it is important to read widely and learn about the nuts and bolts of forex trading before you begin, this can expand to become a never-ending process if you let it. The best approach is to focus on which information will be most relevant to your trading strategy, and save some of the more advanced techniques for another time.
Your current level of knowledge and experience
Some people move into forex trading because they already have some knowledge and experience of dabbling with stocks and shares, or have even had a career in finance and are looking for a new challenge. On the other hand, anyone with a laptop and internet connection can become a forex trader if they have enough commitment.
However, those who are already used to the world of financial trading will have plenty of transferable skills under their belt that will give them a competitive edge. These include risk management techniques, technical analysis skills, and an awareness of how wider socio economic and geopolitical events can influence the financial markets.
If you are already familiar with these concepts, then you will be well prepared to embark on a forex trading career after a relatively short research and training period. However, it’s still strongly recommended that you trade with a demo account for at least one to three months before making live trades.
A demo account allows you to test drive your trading strategy to highlight any weaknesses and correct mistakes without risking any damaging losses. Even successful traders use them when embarking on a new platform or strategy.
If nothing else, it will ensure you are familiar with the layout of the user interface and help avoid delays when you need to find a particular feature or page in a hurry.
If you are a complete newbie, there is no question of skipping the demo account stage! Spending at least three months learning the ropes with a demo account is advisable if you are learning forex trading from scratch.
Your natural temperament and ability
We are all individual in our talents and personalities, and this is not something you can leave at the door when you are forex trading. Some people have a good head for facts and figures and a quick and agile mind. If this is you, then you are in a fortunate position and will probably have a natural aptitude for trading.
However, raw ability is certainly not everything when it comes to a successful forex trading career. It also takes commitment, discipline, self-awareness and emotional maturity, and these skills can be learned and strengthened over time.
Far from the image of the cut and thrust financial world that you might have gleaned from films and books, the key to making steady profits in forex trading is good risk management and the willpower to hold fast and stick to a tried and tested strategy.
When faced with the prospect of losing money or making a profit, we are all subject to powerful emotions such as fear and greed that can influence our actions. Unfortunately, in forex trading, making decisions based on emotions will soon lead you on a downward spiral of failure.
Successful traders often go through a period of failure first, and this might even be a necessary part of the learning process. The difference between them and the also-rans is that they didn’t give up or become angry and frustrated. Instead, they patiently went back over their trading journal to identify where they were going wrong, and made some changes.
This ability to remain stoical and logical no matter what is thrown your way is arguably just as important as a natural facility with charts and numbers. The most difficult part can be learning to recognise the signs that your trading is motivated by a negative emotion, rather than because you have genuinely identified a good opportunity in the markets.
The best traders usually enjoy the whole process of constant learning and analysing for its own sake, rather than because they are driven purely to make money. Profits in forex trading are the side product of a solid trading strategy and a good approach to risk management.
Of course, all this takes some time to achieve. The question of how long will depend on how committed you are to developing your strategy and your level of psychological resilience in the face of moments of anxiety, fear, anger, and so on. It might sound counterintuitive, but patient traders with good impulse control often succeed the soonest.
How much capital you have to invest
One final point about how profitable a trader you will become is related to the amount of capital you have at your disposal. There are plenty of good trading platforms with instant forex funding available that offer high leverage. The amount that you can invest and are willing to risk in each trade will obviously influence your profits margins.
Trading higher amounts will give you a better return even if you make small profits, whereas you can be making impressive percentage returns but if you are trading with relatively small amounts of capital, it will take longer to build up a good income.
Starting small is a good policy for new traders to limit potential losses. Once you become more confident and knowledgeable, you can invest more within the margins of your risk tolerance.
So after all this, you probably still want an estimated timeframe to work with. Those traders who are the most committed and use their available time well can expect to see steady profits within six to 12 months. For those learning forex from scratch around a full-time job, a longer time frame of anything between one to five years is more realistic.
Remember that even experienced traders still have failures, and forex is a constant learning curve that should be enjoyed for its own sake, as well as a source of extra income.