AppId is over the quota
ROTTERDAM, NETHERLANDS, May 03, 2012 /24-7PressRelease/ -- Probably everyone has ever come across a Forex ad and its promises of huge gains. It would be somewhat naive to believe trading will make anyone rich overnight, right? Indeed, there are plenty of stories of one's becoming wealthy, but definitely it took one plenty of time and effort time, not just a couple of weeks. Although such stories as someone made 100,000 bucks within one trade exist, yet the probability of its occurrence is somewhere near a chance of winning a jackpot in a lottery.
But still it is possible to turn Forex into a reliable income source. As the practice shows, there are some apparent similarities between running business and trading Forex. Trading involves hard work which at the same time gives an opportunity to grow your capital, just as any other business does, though the first thing that matters in every business is having a proper business plan and meeting certain requirements to successfully run it.
Necessary investment
Every business requires start-up capital which after certain time would generate a return - or return on investment (ROI). An average successful business generates from 10 to 20% of ROI annually. So if you invest 100,000 USD, you will make around 10,000 - 20,000 USD a year while bearing certain risks. Same applies to Forex trading: a trader realizes his or her potential return on investment and the risks related to such activity. At the same time, even if a trader manages to get an annual 200% ROI with a 1,000 USD investment, s/he will get 2,000 USD, which will be relatively small, bear unreasonable risks, and it will not make any significant difference to trader's financial condition.
Opportunity cost
Every investment has an opportunity cost. To better illustrate this concept, consider you have two options for making money:
Option # 1: a bank deposit with 5% annual interest and 3 hours of extra regular work.
Option # 2: trading Forex 3 hours a day and earning 200% per year.
Case 1: You have 1,000 USD
In this case, you have to dedicate 3 hours per day to earn 2,000 USD a year, while in the first case you could commit to a part-time work making around 21 USD in 3 hours (7 USD an hour) or 4,600 USD a year and get an interest income of 50 USD. So by choosing trading Forex you will earn 2,650 USD less which means devoting your time to Forex trading would not be reasonable as the opportunity cost would be high.
Case 2: You have 5,000 USD
Here is the second case: if you have to choose between devoting 3 hours a day to make 10,000 USD per year and working the same part-time job to get 4,600 USD per year, getting an interest income of 250 USD, then choosing Forex is reasonable as you would earn 5,150 USD compared to the alternative.
Equipment
You need relevant tools to do your job at a top-notch level. As a car manufacturer needs modern machinery to meet the required production capacity, every Forex trader needs a speedy computer and a reliable Internet connection. Every small breakdown would cost an investor money, that is way it would be wise to allocate part of the investments into the latest technology and stable Internet access to minimise operational risks.
Strategy
The trading strategy is probably the main pillar in Forex trading as it predetermines traders success. While car manufacturers use the most recent engineering solutions to design the most cost-efficient and reliable models, Forex traders must sketch a trading plan first because without a decent strategy a trader can easily squander his investments. Fortunately, there are two ways how to tackle the issue: either to buy a strategy or develop it on your own.
The second way is highly time-consuming as it will take years to gain the required knowledge and expertise. Or you can buy a working strategy for 2,500 - 3,500 dollars and it might be a better option as buying such strategy would save lots of time, probably except the time taken for getting acquainted with the trading concept, while getting all the necessary and time-proven tools which would show positive results. Additionally, proper Forex education (with personal tutor, webinars etc.) could cost up to 5,000 USD per programme and it still does not guarantee you success with Forex trading.
Buying a strategy that delivers positive results could be a good investment choice; try to look at it from this side: imagine that you could buy either a MacBook or a trading strategy, what would you choose? Would you go for a depreciating asset (such as technology), which in 5 years will be worth nothing, or for a trading course which could enlarge your capital over the same time period? ProForexCourse could be a nice example: I personally found it highly valuable to learn how to get 1% per trade.
Additionally, there are so-called Electronic Advisors (EAs), which are basically the same trading strategies but they are programmed in an electronic algorithm. FAP Turbo is one of such examples. But there are various disadvantages for using EAs: one of the major issues is the fact that most of them do not tell you how exactly algorithm works. So basically, you are buying a black box, while when you buy a trading strategy in the form of a course/book, you dive into the details and make it clear for yourself how exactly the trading approach works.
Personal skills
Last but not least, Forex trading involves specific personal skills. A person, who considers going to gym to make his/her body fit, has to follow a certain programme to reach the desired results. A businessperson has stick to his business plan to make his project done as planned. And a Forex trader has to keep his trading strategy under control without any deviations. One thing that is common for all these people is persistence towards achieving the desired goal.
If you are a type of person who does not tolerate a daily routine and adherence to a plan, then Forex might not be a suitable activity for you. Even with trading deposits exceeding 1,000,000 USD, a great trading strategy and modern equipment, many traders lost their money only because they could not stick to their own trading plan and the worst part is they got obsessed with gambling. This is why before investing in Forex, you have to be sure that you meet are the above-mentioned requirements.
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