There is not a part-time trader out there who doesn’t dream of getting to the point where they can throw their day job to the wayside and trade currency from the deck of their pool. This is a legitimate fantasy that few will achieve, and for those that do it will be a hard road to get there.
There will be no chance of success at becoming a full time Forex trader until you honestly evaluate the following factors to see if it is viable in your situation:
Start Up Capital
How much is in your Forex account right now? $1,000? 2 grand? How much more can you add to it? Remember, pips don’t equal much when converted into cash and not even leveraging with that amount of money is going to make you self sufficient any time soon. Brokers don’t leverage more than what you have on hand to lose.
If you are still in the small account Forex phase, don’t quit your day job just yet. Focus on slowly building that amount up by managing your risks. Your are going to find at this point in the game, if you focus too much on how much you win and lose you are never going to get out of the starting gate. Instead, focus on becoming a better trader and the money will soon follow.
Now be realistic with yourself about how much you need to profit monthly in order to get by. Let’s just start with getting by and worry about buying a Porsche later. If you live with mom and have no real expenses other than take-out food then maybe you can quit your job now. But if you have rent or mortgage payments to worry about along with all of the other cost of living expenses adults are responsible for, you are going to have to wait.
Go ahead and see for yourself. Write down your housing expenses and utilities. Now add any car payments, insurance premiums or student loans you have to make monthly. Don’t forget your credit card balances. Now add it all up. Are you making that much profit each month by trading? And we didn’t even add in food costs yet.
Plus don’t forget that when you withdraw the money from your account to pay all of those bills, you have to leave some to start trading again. And now this amount has decreased dramatically, so you are basically starting the next month off from scratch.
If You Really Think You Can Do It
In the event that the financial gods are working in your favor and you can realistically pull out from your day job to focus on Forex, there are going to be a number of traits that you must adopt immediately to make it work:
• Risk Management: It is my strong belief that managing your risk is the difference between getting by with Forex and earning with Forex. This starts with never risking more than you can afford to lose. There is the obvious reason for this of course, but there is an underlying reason as well. When you stake too much money in one trade it will mess with your psyche and cause you to make irrational trading decisions. If you want to become a full-time trader, you need to avoid this by always managing your risk to reward ratio.
• Strategies and Journal Keeping: If Forex trading is to become your full time job, than you have to be professional about it. Just like an accounting firm or stock broker keeps careful notes of their transactions, you need to do the same. Take your time formulating strategies and keep track of your progress in your trading journal. This will keep you in the mindset that your Forex trading is indeed serious business.
• Emotional Distance: A full time trader must have a mindset that is strong enough to allow them to remain emotionally unattached to their trades. Part of this goes back to managing risk, but part is also tied into other emotions such as greed and anger. Revenge trading after a loss is one example of this that can quickly lead to accumulated losses.
• Patience: Above all else, a professional trader has to be patient. You need to know when it’s a good time to just sit back and wait out a storm, even if that means not trading for a few days until the markers line up right for you.
You should always have a buffer if you are going to make Forex your full time profession. This will help protect you during those times when the risk is too high to be making trades. You are better off to make use of money you have set aside during these times than to risk a big loss by making a risky trade.
It is estimated that out of the hundreds of thousands taking advantage of the currency market to make money, only 5% are able to make a successful full-time profession of it. If you have hopes of becoming part of that 5%, start now by education yourself and working on those great trading habits you are going to need. Only when you have the skills and capital in place will it be possible to pull up a pool chair every morning and be at work.