Success in forex trading, like success in other spheres of life, depends on hard work, dedication and discipline. The key thing to remember is that fortunes are not made on any given day. Successful traders are in it for the long-run, limiting their losses and compounding their profits in order to accumulate capital. This is why money management is one of the secrets to success in trading. Without a sound money management strategy you may have wildly profitable trades, but the likelihood of you giving that profit back to the market is incredibly high. Being able to stick to strict rules that limit your risk is the best way to keep your profits and to be able to grow your account in the future. The idea is to think long term. Even if your individual trading style is short term, you learn how to string many little victories together over a long period of time, reinvesting a percentage of your profits and cutting your losses so that not only do you can stay in the green, but you grow your capital. Broadly speaking, there are two aspects of trading that must come together in order for a trader to do well. First there are the actual technical abilities of learning how to read charts, to understand chart patterns and market moves, to be able to use your platform to open and close positions in a timely manner in live trading conditions. Then you have money management, this is a side to trading that many times gets overlooked. Knowing how to trade isn’t just about knowing how to read charts and enter positions. You must also be able to develop rules for when to take profits or when to cut losses and to stick to them. This is the difference between successful traders and all the rest.
This varies depending on how much capital they have to invest. The true heavyweights in the game are able to make millions in a single day by correctly predicting huge market events that blindsided everyone else. The reality, however, is that these massively successful traders are outliers. In any human activity a small percentage reaps the overwhelming majority of rewards. Trading is no different. Most traders lose in the long run and only a small minority enjoy long term success. A good guide, though, if you want to compare your own performance to accomplished traders, would be to consistently be making 15-20% gains. Achieving such percentage growth would put you in the upper echelons of forex traders worldwide.
Judging by the statistics on how many forex traders blow their accounts up within their first three months of trading, many would say that forex trading is a good way to lose money. However, like any other enterprise, only a small percentage succeed in the long run and their gains are paid for by the losses of everyone else. There are different levels to any type of game and forex trading is no different. If you can manage to graduate from the class of rank amateurs and see to it that you maintain your account and even grow it incrementally, you are on your way to becoming a good trader. From there it is just a matter of dedication and hard work to play the long game and keep increasing your capital. The reason why forex trading is so attractive to people is that it’s a very desirable career. It’s a job in which you are your own boss, you get to choose the hours that you work and you can be entirely self-directed. For this reason, if you manage to make it out of the beginners category and become a serious trader, it’s a very good way to make money.
The most successful forex trader in history is none other than George Soros, whose name will forever live in infamy for being “the man who broke the bank of England”. In 1992 Soros bet big against the pound sterling, having realized that the country’s currency had been brought into the European Exchange Rate Mechanism at far too high an exchange rate. The UK’s inflation level was much higher than its European counterparts and the British government’s reluctance to raise interest rates to deal with this inflation, or to float its currency, led him to taking a massive short position, to the tune of $10 billion, against the British pound. This earned him over $1 billion by Black Wednesday (September 16, 1992) when The UK withdrew from the European Exchange Rate Mechanism and devalued its currency. It still remains the most profit made by a trader in a single day.