Average income of a Forex trader – how much traders make?
Compared to traditional methods of earning money, working in Foreign exchange has a number of advantages. The common question that newcomer independent Forex traders ask is regarding the average income of a Forex trader.
In 2022, the Forex trading profession is one of the highest paid in the world. It is a prestigious profession, and in the United States it has topped the list of the most prestigious professions for more than half a century.
After all, a senior trader is not just a market expert and analyst, he is an emotionally and psychologically stable person with a flexible mind and quick reactions. Typically, experienced traders are charismatic and erudite, and not just in economics and politics.
If we add here the highest salary potential of all occupations, we get an optimal job for most people. However, you have to spend time on it. It is necessary to improve, day by day, your skills and to trade constantly, even if initially you start from a penny count. But if you approach the matter competently, trading profit and prestige will not be long term.
Average income of a Forex trader – Can Forex trading yield enough profit to earn a good living?
Many traders working on Forex make a very good living and some have had great returns on investment. According to Glassdoor the average salary for a Forex trader is $71,837 per year in the US and 25,000 in commissions
A novice Forex trader can indeed make sustainable profits by trading currencies, even with a low starting capital. It just takes enough patience, learning and practice to successfully generate reasonable profits on a regular basis.
Of course, no one can guarantee their earnings in a 100% sure way, but once you have enough experience in trading, then you can gain profitability on a consistent basis. Then one day you will seize an opportunity that can win you up to $400,000. Thereafter, a conservative monthly return of 3% to 4% could earn you between $12,000 to $16,000 per month. That’s enough to live on! After that, the time it will take depends on your starting balance as well as the level of aggressiveness of your trading.
Which trading method to choose?
Forex traders can be divided into 3 categories: those who trade manually, those who copy trades and those who trade in an automated way. Each of the methods has its specific characteristics which can have advantages and disadvantages depending on the preferences of each trader.
By trading manually, you will feel all the sensations inherent in Forex trading and you will have complete control over your trades. This requires a lot of time, attention and precision because all the orders are carried out by yourself, without any automated support.
Manual trading is very interesting and allows you to always be aware of the situation in the market. The fact that everything depends on the trader can generate stress if many orders are open simultaneously, however, it is always up to the trader to decide if he wants to trade or close a position.
On the other hand, automated Forex trading has the advantage of ignoring emotions, which is a big advantage for new traders. One can trade with the help of robots even while being absent and not having the possibility to follow the charts. Unfortunately, automatic trading does not allow you to have full control over your trading account.
Copy trading Forex is currently one of the biggest trends in the investment world.
Unlike many other sources of passive income, copy trading is available to ordinary people who don’t have a lot of investment capital. Copy trading allows you to copy the strategy of a professional. A trader signs up to copy the trades of a professional trader and voila. In other words, any position opened and closed by a professional is opened and closed through an investor’s account. In this case, the trader hardly participates in the trading process.
All three methods have equal advantages and can bring benefits in a sustainable way. Manual trading can be compared to an intense and very competitive sport like Formula 1, whereas automatic trading and copy trading are more like a race in concept.
Average income of a Forex trader – Trader who starts can manage to earn in Forex $100 a day
Of course, the examples of most famous and most successful traders, like Soros for instance, are more exceptions than the rule. In 2022, a beginner can manage to earn in Forex $100 a day, provided his down payment is at least $200, he will trade the EUR/USD currency pair, with the effective leverage of 1:100, using an aggressive strategy successfully. The bigger the deposit, the more profit you can get.
In theory, if your down payment is $10,000, you can earn up to $5,000 per day. However, this is not a dogma, and it is only a guideline for a very aggressive strategy. Professionals, as a rule, do not seek to earn more than 5-10% of their deposit amount per day, trying not to take any too risky steps.
How much money should you invest to start earning in Forex?
We have already mentioned that the investment amount is one of the key parameters that determine the earnings of a Forex trader. It should be borne in mind that profit in the Forex market is usually considered in percentages, and not in absolute numbers.
In addition, each category of traders has its own subjective evaluation indicators. So, beginners consider 1% per day to be very low profitability, and for traders of the world’s leading banks, the same 1% is simply enormous. It is clear that earnings are also directly affected by leverage and the number of lots the trader makes per day. Because if the risk also increases with the increase in leverage, the profit increases proportionally.
The main factors affecting a trader’s earnings are the investment amount and the size of leverage. The success of the forecasts and the correct assessment of the general economic situation in the world are also of conceptual importance.
However, these elements are directly related, because by simply analyzing the state of the global market, a trader makes his predictions. But the direct earnings are in any case determined by the down payment. In other words, the more you invest, the more you can earn.
How to get a stable income in Forex?
As for the factors that determine the stability of earnings in Forex, here is what you should pay attention to.
- Choice of a reliable broker.
Experts are convinced that the right broker is almost half the success. Because the broker determines the trading tools a trader can use, the amount of leverage, account types, opportunities for risk diversification, etc.
- Management of funds.
The average Forex trader salary who adheres to conservative strategies and tries to diversify risk as much as possible does not make large offers and uses moderate leverage.Beginners are not recommended to use high leverage and their entire outlay at once. Here, a detailed risk calculation is necessary so that in case of failure, you always have enough funds in your account to continue trading actively.
- Risk minimization and diversification.
You need to work with multiple trading tools, open multiple lots at the same time, get up-to-date market analysis, use PAMM wallets, not PAMM accounts, in the case of investing. The Forex market offers many opportunities to reduce risk, and for a steady income you need to use all (or most) of them.
- Forecasts
A correct forecast is the basis of a stable income in Forex. Forecasts are based on market analysis, charts and tables for specific trading tools (they are often provided by brokers themselves). Moreover, you can target major signal providers.
- Psychological preparation.
A trader must clearly understand that any of his lots can win, but he can also lose. He must be prepared for the fact that several consecutive batches can be losers. Willingness to take risks and psychological resilience protect against rash decisions.
- Monitor the markets
Any problem with the national currency is a potential opportunity for a trader to make money. Crises of economic ecosystems of all levels are also a reason to react by making up-to-date forecasts and buying or, on the contrary, selling one or another of the currencies. Therefore, it is very important to constantly monitor world news and stock movement charts for the targeted trading instruments.
Average income of a Forex trader – In conclusion
The principle of earnings in Forex is based on the fact that the level of incomes here cannot be fixed in an absolute way and vary depending on a large number of factors. However, this thesis should not be misunderstood — in the Forex market you can certainly make money and earn a lot of it.
Deposit, leverage, monetary tools, functionality of the trading platform, effective trading strategy and risk diversification, these are basic parameters that determine a trader’s earnings. But Forex is a global currency market, which means it follows global trends. In other words, it is important for a successful trader to know what is going on around him.
