What do you think – Is Forex Trading Profitable in 2022? should you try your hands here, and dare to invest? Well, experts are somewhat divided here. Some say that stock exchange is better, while some say that Forex is a safer game.
We’re going to dig to the deepest point today to get our answer!
How profitable is Forex trading?
The straightforward answer to this is – it depends upon your knowledge, efforts, implementations, and sharpness of mind. How to be successful in forex trade is an entirely different topic, and we’re here to know what opportunities does Forex trade give you for making money, and whether you can fulfill your dreams of becoming the “Richie-Rich” via this business or not.
Let’s dive deeper now!
Is Forex Trading Profitable? – It Will Open Your Eyes
Forex trading certainly carries several advantages, but it’s true that you can’t go rich overnight, and there are no shortcuts here. Yes, Forex trading is challenging for those who just target to make money quickly. Such a mindset drags to failure very soon.
However, there are tons of opportunities here for those who are willing to dedicate efforts and time to attain success in this trade. Also, we might face loss, but we’ll get deeper on that later. Firstly, we’re going to list down the factors that attract you to become a Forex trader.
Is Forex Trading Profitable – Factor 1: It’s easy to learn Forex
As we said, dedication is the key to success here, the similar way it is in other trades. Most importantly, Forex trade is not everyone. If you really have an interest, then yes, it can bring you great profits once you get yourself familiar with it.
The big enjoyment is that you don’t need to spend years and get degrees in learning Forex and start trading. If you’re highly concentrated, you can complete your basic training in 3 months also.
If you are aware enough about the risks, you can certainly buy Forex VPS hosting plan, make other necessary arrangements, and start trying your hand in the Forex trading, and if you start earning good, then there’s nothing surprising! However, for gaining complete expertise, you need something close to 2 years.
There are no complications in learning. Experts count the Forex course as an easy one, though. If you combine your fundamental marketing analysis and your Forex technical analysis skills, making money will be pretty easy!
Is Forex Trading Profitable – Factor 2: It’s a 24 hours running game
The Forex market never stops or sleeps. It’s open 24 hours a day and 5 days a week. This opens the opportunities for part-timers. Yes, the market won’t dictate you when to trade. You are free to trade whenever you want—no waiting for the opening bell here. You can complete your order’s execution at any time. You can trade on your own schedule.
You can try it after returning from your current job, or right after your morning rise. Also, today, you’ve got the flexibility of executing your Forex trade form your phone also, so you can work lying beside the pool in a chilling afternoon as well!
Is Forex Trading Profitable – Factor 3: Amazing Leverage
One of the biggest advantages of Forex trade is amazing leverage. With a small deposit, you can control much bigger total contract value. Leverage permits you the ability to grab great profits and keeping the risk capital to a minimum limit simultaneously.
for instance, in case a Forex broker offers 50-to-1 leverage, it means that a margin deposit of $50 would permit you to buy/sell $2,500 worth of currencies. Now, that’s truly fascinating. Stretching it further, you, with $500 in hands, you can carry a $25,000 trade, and so on!
That seems like gravy, but the experts describe leverage as a double-edged sword, as you need proper risk management before working with leverage. However, the right training can keep you on the right path. Yes, you can make huge money due to leverage.
Leverage can be defined as the context of investing means through borrowed capital or financial instruments to increase a trade’s potential ROI. Leverage margins and ratios depend on what specifications you set forth as an individual Forex broker.
Leverage is a crucial part of every sort of trading. With a little commitment, Forex margin-based trading permits for a little amount of cash to bring you huge returns, as discussed above.
Forex is much better than stock trade in terms of leverage. Generally, 2:1 is the leverage most stockbroker offer for overnight holds and talking about the day trading; they offer 4:1. Prop firms even offer up to 30:1. On the other hand, with Forex, you can legally enjoy up to 50:1 leverage. A “hard to believe” the truth is that several offshore brokers willingly offer 500:1.
Is Forex Trading Profitable – Factor 4: Rising and Falling Prices Brings Profit Potential
Let’s talk regarding the profit potential now. The Forex market is not having any restrictions on directional Trading. In other words, if you think a currency pair will enhance in value, you can purchase it or go long, and in case you think it will be getting decreased in value, then certainly you can sell it or we say, go short.
As currencies trade in pairs, there’s always you can buy one currency as well as sell the other no matter in case you’re going long/short. For example, in case you’re trading the U.S. dollar or (USD or GBP) British pound currency pair.
You’d buy that pair—that ‘s, purchase the dollar & sell the pound—in case you expected the first currency’s value, known as the base currency, for enhancing in value instead of the second currency, which is known as the quote currency.
You might sell that pair—sell the pound & purchase the dollar—in case you expected the pound’s value to decrease in comparison to the dollar. Not as the stock market, where you can firstly borrow shares for selling short, in the market of Forex, selling a currency that you don’t own is the simplest process for which you can only place a sell order.
Balance does not offer investment, financial services, or tax and advice. The info is being presented with no consideration of the objectives of investment, financial circumstances, or risk tolerance of any certain investor and may not be perfectly suitable for every single of the investors.
Past performance cannot be indicative of future results. Investing will involve risk incorporating the possible loss of principal. The full value of the position, when exactly it’s closed, will define the profit or loss you make. Hence, Trading on margin brings you the opportunity to generate huge profits from numerous small investments.
However, the same can amplify the losses as well. Yes, the loss can exceed your initial deposit. Due to that, before trading CFDs, considering the overall value of the leveraged forex position is compulsory.
Is Forex Trading Profitable – Factor 5: No Commissions on Most Accounts
Trading commissions are generally not included here, or they are pretty low if you’re involved in large volume trades. Besides that, there are no exchange or clearing fees. The majority of the retail brokers generate their revenue via the “spread.” It’s the difference between the asking price and the bid.
Besides that, Spreads in the Forex market are very tight, and that makes Forex trading one among the most cost-effective investment tools available today.
Is Forex Trading Profitable – Factor 6: Low Transaction Costs
The transaction costs are generally built into the price market of Forex as the spread. Forex brokers pocket this spread as their payment amount for facilitating the Forex trade. We measure spreads in pips.
The fourth spot after the decimal dot is called the pip, or we say, the hundredth part of a percent for most of the currencies. In the case of the Japanese yen’s trade, a pip is the second place instead of fourth, after the decimal point, or 1%. For example, in the Forex business, in case the bid cost was 1.4268, while the asking price was 1.4271, the transaction’s spread was 3 pips.
Some brokers charge commission as well, either it’s based on the transaction amount’s percentage or a flat fee. Overall, Transaction costs in Forex are very low than several similar trades.
Is Forex Trading Profitable – Factor 7: Low Barrier to Entry
How can we define a “barrier to entry?” It’s the obstacle or cost that exists, either culturally or purposefully, in order to ensure the prevention of new competitors entering an industry.
Entering the Forex market is easy, though. Here, a newcomer can come, earn, and even dominate. It doesn’t mean that the established industry members have the threat of suddenly getting undercut by newcomers. As the barrier entry is low in Forex trade, it is continuously growing, thriving, and spreading.
You don’t need bundles of banknotes to success int he Forex game. Hence, Forex trader is highly suitable for the freshers, having determination towards this field.
Is Forex Trading Profitable – Factor 8: High Liquidity
Liquidity can be related as the ability of any asset to be rapidly converted into a case. For instance, you can cash your gold whenever you want and get instant cash, which means the liquidity is high in this case. From an individual point of view, liquidity is generally experienced in terms of the flicker of price movements.
Coming back to Forex, you’ve got high liquidity, which means that you can conveniently move huge amounts of money in and out of currencies, mostly with small spreads (the margin between the ask prices for potential sellers and bid prices for potential buyers).
It won’t be wrong to say, the Forex market is the most liquid financial market in the world currently. However, currencies are subject to changing liquidity conditions that all Forex traders need to consider always.
Is Forex Trading Profitable – Factor 9: You can go long or go short
You can use derivative products (for example, CFDs) and go short on other markets, and short selling is an inborn part of trading Forex. You’re always selling the quote currency to the base currency. The price of a Forex pair depends upon how much the base currency’s unit is worth in the quote currency.
We’ll use an example here. In the GBP/EUR Forex pair, the base currency is GBP, while the EUR is the quote currency. In case GBP/EUR is trading at 1.12287, then one Pound holds the value of 1.12287 euros. Now, in case you’re expecting a pound to hike against the Euro, you’d prefer buying the pair (going long).
If you’re expecting the exact reverse – the Pound’s value decreasing against the Euro, you’d prefer selling the pair (going short). Here, your perfection in prediction determines how much profit you will gross. Yes, you can earn a profit, no matter which way the market moves. Isn’t that cool?
Is Forex Trading Profitable – Factor 10: The Costs of Transactions are Low
The transaction’s cost is normally built into the cost in the forex market as the spread form. Forex brokers basically pocket the spread like their payment to facilitate the trade.
Spreads are usually measured in pips. For most of the currencies, a pip is the fourth place right after the point of decimal, or 1 out of 100%. For trades, which are involving the Japanese yen, second place is what a pip is having right after the decimal point or 1%.
In a forex trade, in case the bid price was around 1.3255, and the asking price was around 1.3257, so the spread for this transaction was 2 pips.
Brokers might also charge a commission, either a flat fee or they can charge based on an amount’s percentage of the transaction.
Forex or Stock Market: What’s better
If you’re in confusion about whether the stock market or Forex is better for you, then the biggest consideration is your attitude to risk, and then come to your financial goals. Leverage, ease learning, and easy entry in the market can highly attract you to choose Forex over the stock market.
Risk is there on both sides, but Forex, we’d say, is still easier to predict than stock market shares, and in Forex, you can go long or go short, and earn both the ways.
But where can a beginner make big money?
Again we’d say, leverage is playing a big role in favor of Forex. Leverage in Forex permits you to pay just a little portion in contrast to the upfront position’s full value and open a position on the market of currency.
Your choice about whether to stock or trade Forex on leverage must be based on the type of asset, in which you’re interested in trading – currencies or shares. Most importantly, there are some reasons why traders mostly prefer to trade forex than stocks:
- Opening hours of the market: the stock market is limited to their opening hours of exchanges, whereas 24-hours a day is the forex market’s open time. However, it’s worth knowing that specific stock indices are accessible for weekend trading.
- Greater liquidity: the forex market sees an average every day turnover of around $5 trillion. On the other hand, the stock market sees a bit fewer traders every day.
- High volatility: the stock market is having higher stable prices, which change over a long period of time. However, this is a fantastic thing for a few trading styles; the forex market’s volatility can build an opportunities’ exciting range for shorter-term traders.
Is Forex Trading Profitable – F.A.Q
You might still not ready to get your feet wet in Forex trading due to some doubts. We’re here to clear those. If you start your Forex journey, you’ll get to absorb a new bit of knowledge every single day, and the process goes on for the years to come.
Having the right knowledge is compulsory, and cherishing the following FAQ, you’re certainly gonna attain important knowledge, helpful for taking the right actions during your Forex trade journey.
Is Forex trading good for beginners?
Obviously, opting Forex is a decent choice for beginners, and with the right knowledge, you can begin earning good before you expect. There’s much to enjoy, and you can earn enough by implementing the right knowledge and strategies. Most importantly, learning this trading is easier than you expect.
But you can’t move ahead without a highly reliable Forex VPS Hosting plan.
What’s the difference between a demo and a live trading account?
Demo trading accounts prove to be so helpful. You, as a beginner, can train yourself with these demo accounts and implement your trading strategies, most importantly, without risking a penny.
A demo account is entirely similar to a live account concerning the trading platform, charting, and instruments. We repeat, the only difference is that you’re using virtual money for trading in the demo account.
Can you get rich by trading Forex?
Obviously, you can! Once you become a Forex market geek, there’s no limit to earning. Also, we’d agree with the fact that one can become rich in a really short period. However, the pace of getting rich is much higher in the Stock trade, but in Forex also, there’s much juice!
Which currency pair is most profitable in Forex?
No one can give a correct answer for this, though. It entirely depends on the market’s flow and time. In Forex, the currency is like a teeter-totter (the see-saw, which we enjoyed in the playground when we were kids).
However, the big recommendation is that for playing a safer game, make a trade with just the major currencies, and there are 8 of them – USD, EUR, CAD, JPY, CHF, GBP, AUD, and NZD. After that, here’s the way how currencies are paired and offered to traders by several brokers:
Can you make money with IML?
Similar to any MLM, you can certainly make money with iMarketsLive (IML). However, here, the odds appear slim. Here, the biggest problem is with the products. With this company, a set of software is what you’re supposed to promote, which could help people earn money with trades. There’s an equal chance of losing money as well.
Can I be a part time Forex trader?
Once you’ve got the basic knowledge, certainly you can work for whatever time you want. You can conveniently work as part-timer, occasional, or a full-time trader. There are also numerous tremendous Forex jobs available out there for those possessing enough skills. However, if you put full time, you can gain mastery faster.
We got all answers for your question – Is Forex Trading Profitable in current time, and now, there’s the most important note for you.
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As we learned in the preceding guide, Forex is profitable, and it can be profitable in a variety of ways. It all depends on how well a trader manages risk and adheres to strategies to remain profitable.
Wait no more, as Forex trading is a golden game!