Adam, is making a living off trading Forex alone a realistic ambition for a retail trader like me? It certainly could be a realistic ambition. However there are several things that you will have to put in place to give you a reasonable chance of doing forex trading for a living:. The best way you can do this is as follows:. Toggle navigation Toggle navigation. However there are several things that you will have to put in place to give you a reasonable chance of doing forex trading for a living: A significant amount of capital at least 25 times larger than what you need to live on each month after tax.
Do not forget that you might have to pay tax on any money you make, so you should be careful to factor that in to your calculations. You should also have a substantial sum in reserve, so that if things go badly wrong you will have some time to extract yourself from the situation without going bankrupt, like finding a job.
This sum should be enough to cover your living expenses for at least 6 months, and ideally for a year. You will have to be a very good trader to do forex trading for a living. It means that you are able to be more right than wrong in anticipating the direction of the market consistently over a meaningful period of time. For most people, getting to this level of proficiency takes a considerable amount of time and practice. Making a living only from trading your own money is extremely stressful.
Even if you have the money and the ability, because there is no magic formula you can use, you can always be liable to attacks of self-doubt and panic, which can become self-fulfilling prophecies.
If you do not have the confidence to do it, and the mental fortitude to get through the statistically inevitable losing streaks, your ability and capital will count for little, and you will probably go through one of the more unpleasant periods in your life. I cannot emphasize this final point strongly enough. The best way you can do this is as follows: Learn, learn, and learn. Open a demo account and see if you can become profitable for several consecutive months without any wild account draw downs.
Try to imagine it is real money. Once you have achieved this, open a real trading account with an amount of money that you can afford to lose and seems small to you. Most traders find it considerably more difficult to be profitable risking their own money than when they are trading a demo account, for obvious psychological reasons. When you are able to be consistently profitable with this for a period of several months, let the account grow and consider adding to it.
When you eventually have a large enough account you can consider making Forex trading a full-time occupation. Be warned that this final step can be very dangerous! If possible, consider working part-time, or keeping some kind of other income-generating activity, at least for a while.