Sure, Forex can make you a millionaire. But is it likely that you would become a millionaire trading Forex? Well, it depends on a lot of factors. You should know one thing though — making consistent profits as a retail forex trader is very difficult, let alone becoming a millionaire. In fact, a great majority of retail traders lose all their money.

However, a few traders, like George Soros, Stanley Druckenmiller, Bill Lipschutz, and some others, have actually amassed great wealth trading Forex and other financial markets. If they can do it, you too can, but it requires years of hard work, dedication, patience, and discipline. You will need to build a profitable strategy, have enough funds, and be mentally ready for the emotional battle.

Here’s the thing: retail traders like yourself are at the bottom of the food chain, so surviving the sharks and fighting your way to the top takes a lot of effort, determination, and persistence. If you approach the market looking to make quick and easy money, you will be in trouble. You must be willing to learn the skills and put in the hard work if you are to become the trader you want to be.

In this post, we will discuss the things you must do to succeed in forex trading and the practical steps to take in building wealth from the market. But first, let’s discuss the lies out there, as well as the truth you should know about trading.

Forex can make you a millionaire, but don’t believe these lies

There too much dishonest content on social media meant to promote forex trading as a very easy way of making money — where any person can amass an incredible amount of money by just clicking the buy or sell button. You would see images of young people with ocean-front mansions and the latest Bugattis and Bentleys claiming to have made all that money trading forex for a few weeks or months.

That is outrageously deceptive. You should never fall for it. Remember, if it is too good to be true, it is obviously not true. If you notice, most of such content is used to sell a brokerage firm or a signal provider selling a system with a 120% win rate. It is becoming very common these days.

There is also another group whose favorite product use to be binary options. You would see something like this:” I started with $1 and traded for a couple of minutes and made a hundred bucks. I was intrigued and continued trading, doubling my stake size with each trade. Before the end of the week, I made $10 million.”

With the advent of cryptocurrencies, the game has been with ICOs (initial coin offers). You would see things like: “this coin is about to take over from Bitcoin as the king of cryptocurrencies. Invest now at 1 cent per coin before it goes to $500 per coin in the next few weeks.”

In summary, don’t ever be carried away by these lies:

  • How I started trading forex with $2 and turned it to $20 billion…
  • Forex trading promotions with private jets and luxury cars
  • Binary options promotions
  • Cryptocurrency promotions
  • Brokers that offer too many bonuses — Account opening bonus, deposit bonus, trading bonus, etc.

How forex can make you a millionaire: the truth you must know

Forex trading is the hardest way to make easy money. While it is possible to become a millionaire trading the forex market, it is very difficult — more like swimming in a shark-infested ocean. You are battling the central banks, the big commercial banks, investment and hedge funds, other retail traders, and most importantly, your broker.

The forex market has no central regulation, so it is more like a jungle where only the fittest survive. While different countries have financial regulators that supervise the activities of brokers within their jurisdictions, anyone from anywhere can access the market, so it’s pretty common to have brokers operating from any of those Island nations where regulation is not as strong, and many of such brokers can be dishonest.

Being a retail trader, you are at the lowest level of the food chain, and everything is organized in such a way as to collect from you rather than you making money. You are in a fight with everyone else, including your broker, especially if you happen to be using any of those dishonest brokers or dealing desk brokers in general.

But in spite of all those apparent difficulties, you can make money from the forex market if you focus on doing it the right way. To win the battle, you must be smart enough to survive first. Thus, survival should be your watchword. Take your mind away from making all the millions in the market. In this game, money is only a by-product of doing things right. If you fail to do the right thing, you won’t just be prevented from reaching your destination (making money), you will get consumed (lose your capital) by the sharks. That is why the Oracle of Omaha would say that there are only two rules in the game: “Rule 1, Protect your capital; Rule 2, Don’t forget the first rule.”

It is only when you survive long enough that you would begin to understand how to play the game and start making money. Trading is an art that you can only learn through consistent practice. You can master it and possibly make a lot of money from it, but you must be ready to put in the hard work and have the mind to stomach the heartbreaks.

There would be many ups and downs, but if you are determined and passionate enough to carry on when the going gets tough, you are likely to achieve your goals because many people have done it before you. If they can do it, you too, with the right effort and guidance, can do it.

Breaking down the process of making money from forex, you will see that becoming a millionaire is something achievable if you get it right and allow your money to grow. For instance, let’s say you have a strategy with a 2:1 reward/risk ration and a modest win rate of 50%. Assuming you started with a $10,000 capital, risking 1% of your capital per trade and, on the average, you get 10 trade setups in a month, your average monthly ROI can be calculated as follows:

No of trades per month = 10

No of wins per month = 5

No of losses per month = 5

Amount risked per trade = $100 (1% of $10,000)

Amount won by the end of the month = 2 x 100 x 5 = $1,000

Amount lost by the end of the month = 100 x 5 = $500

Profit made by the end of the month = $1,000 – $500 = $500

The ROI for the month = $500/$10,000 x 100 = 5%

If you are to be making an average of this 5% ROI each month, in 10 years, your account would have grown to millions assuming you don’t withdraw from it — that’s the power of compounding. Let’s see the math:

Compounding rate = 5% or 0.05 per month

Principal = $10,000

Time = 12 months x 10 years

Amount in 10 years’ time = Principal (1 + rate)Time = $10,000(1 + 0.05)12×10 = $3.489 million.

So, it is definitely possible you can become a millionaire trading forex, but can use consistently make 5% profit each month for 10 years? Read on to learn what you need to do to stand a chance!

What you must do before forex can make you a millionaire

Let’s state it again, making consistent money from forex is probably one of the toughest tasks you’ll ever undertake, but it’s not impossible. You stand a good chance of achieving that if you can do the following:

Learn the skills

The primary thing in becoming successful in any career is to learn the necessary skills required to thrive in that career — a lawyer must learn how to argue with facts, a doctor must learn to diagnose and treat diseases, and so on. In the same way, if you want to be successful in forex trading, you need to put in the hard work and acquire the skills.

Talking about the skills for forex trading, it is a lot of work because there are many aspects of the game that you need to master. As a newbie, you would start by learning the trading terminologies and how to use the trading platforms, which are the basics.

From there, you step up to learning how to analyze price charts and interpret price movements, both directly with the raw price data or indirectly with the help of the various indicators. This is what traders refer to as technical analysis. In addition to that, you also need to learn the basics of fundamental analysis — interpreting economic data and the potential effects of political news and events. You then use all those to create a few reliable trading strategies.

The next is to learn how to manage your trading capital and the amount you risk in a trade, as well as how you manage your trades in such a way that you do not risk more than you intend. You achieve this by knowing the amount you want to risk in the first place, placing the right trade size, and using a hard stop loss to make sure that your risk remains as you intended. This is known as money and risk management.

But the ultimate trading skill is developing your mind to think and act like a trader. This means focusing on the process, instead of the outcome, because you know that the outcome of each specific trade does not matter. With this reality, it becomes clear that your emotions, such as excitement, fear, anger, hope, and greed, can work against you, so you have to tame them. This is known as trading psychology, and you will keep learning it all through your trading life.

While you can teach yourself all those skills, it pays to learn them from an expert by enrolling in a paid trading course, like the one offered by Pro Trading School.

Have a good source of income

In forex trading, as with any other business, you need money to make money. Hence, having a good and reliable source of income is extremely important, and there are many reasons for that, such as the ones we will discuss shortly.

As an adult, you have to feed, clothe, pay your rent and utility bills, and take care of other miscellaneous expenses. All these require money, and within the first few months of your trading journey, you will most likely not be making enough money from forex, if at all you would have made any, to take care of them with your trading profits. So, a source of income is very vital for your survival at that stage.

And even when you start seeing big and regular profits, you still need another source of income to take care of your needs if you want to grow your account and become a millionaire one day. Here’s the thing, the only way to become a millionaire trading forex is by retaining some or all your profits and leveraging the power of compounding to grow your account. The more profits you make and retain on a regular basis, the shorter the time it would take you to become a millionaire.

Apart from the above, there is also the psychological effect it has on you. It removes the burden to make money fast from you so that you can trade with a clear mind and focus on implementing your strategy properly, rather than the outcome of every trade. The burden to make money from every trades can lead you to make trading errors, such as trading without a stop loss, which can decimate your trading account.

Having another thing you can commit yourself to from time to time also helps to reduce the risk of overtrading or micromanaging your open trades due to itching fingers. Furthermore, you need a good source of income to be able to raise enough trading capital. More on that below.

Save a reasonable capital

You have to save enough capital that can possibly be traded to millions in your lifetime. Without adequate trading capital, growing your account to millions of dollars becomes almost impossible. What we mean is that if you are making consistent monthly profits and retaining them, it may be possible to trade a $20,000 account to $1 million in 10 years without using too much leverage, but doing that with a $100 account becomes almost impossible.

Yes, forex can make you a millionaire but you have to raise enough trading capital to start with. So, start saving for your millionaire-forex project right away, while you learn everything you can about forex trading. When you have learned enough, start trading part-time, while you continue to build your trading capital and create other sources of income, which can help you achieve your trading goal faster.

Have a growth mindset

You must be ready to build and grow your account. Without a growth mindset, you will never become a millionaire trading forex, assuming you are already making consistent profits. In other words, if you keep withdrawing all your profits at the end of the month, you won’t be able to grow your trading account any bit, let alone hitting the million-dollar goal.

So, what do you do? You must have a plan based on your income options. If you have another source of income that can take care of your needs, you should retain all your trading profits for your account growth so that you can realize your goal faster. But if you don’t have any other reasonable source of income, you have to work out a percentage of your profit you can withdraw to take care of your monthly need, while you retain the rest for your account growth. The point is that something must be accruing in your trading account for you to leverage the power of compounding in your account growth.

Practical steps to building wealth from forex trading

Now that you know what is required of you to start building wealth trading forex, we can discuss how you can do that. Although forex can make you a millionaire, it cannot happen overnight or even in a year. To realize that goal, you have to be able to work hard for many years. Here are the steps to follow to stand a chance of reaching that target:

1. Get a well-paying but flexible job

Yes, you need the money that a well-paying job can offer, but you also need to have enough time to devote to your trading journey. You know your abilities and the kind of jobs you can do. However, focus on the ones that can give you enough quality time for learning trading skills and practicing what you’ve learned. If it’s possible, consider remote jobs you can do from home. You can freelance any of your skills on any of the freelancing platforms.

2. Draft a savings plan

Save as much money as you can from your income. We know that it’s not always easy to save, which is why we advise that you draft a savings plan, because there are always things to consume the little you have. Go through all your monthly expenses and group them into needs and wants. The idea is to cut down on your wants and save some extra buck each month.

Depending on your monthly income, if you can save $500 every month (less than $20) per day, in less than two years, you would have over $10,000 to pursue your millionaire-trader goal.

3. Enroll in a trading course

This is very important if you want to hasten your learning curve and progress to live trading early enough. You can learn on your own, using all the free resources you can find on the internet, but it’s better to learn from someone who has experienced the journey you are about to embark on and is willing to put you through everything while allowing and helping you to come up with your own strategies. Pro Trading School can help you.

4. Do your research

Learning from an expert is not a reason for not doing your own research because you have to come up with your own strategies — using a strategy developed by another person will not give you that sense of ownership which is very useful in implementing the strategy. So, do your own research: Study a lot of books and trading blogs, watch videos, and discuss your trading ideas with your expert trainer.

5. Create some trading strategies

From your research, you should come up with a few trading ideas for different market conditions. Develop those ideas into trading strategies by putting down the criteria for a trade setup, the optimal stop loss level, and the right profit target. Three to four strategies are fine at this point.

6. Back-test the strategies

The next thing is to back-test your strategies to see how well they fared in historical price movements. Simply move back in time on your chart and look for where trade setups occurred according to your trade criteria and record their outcomes. After seeing as many setups, go through your record to see how well the strategies performed.

7. Front-test with a demo account

If your strategies did fine at the back-testing stage, you can move on to front-test them on a demo account. You simply open a demo account and trade the strategies as the setups occur in real time. As you trade, you record the relevant data of each trade. After about 30 trades on one strategy, review that strategy to see if it has a positive expectancy. While you are on this, start Step 8.

8. Search for a good broker

There are many dishonest brokers around, and they are the ones that do the most advert. Be very careful in choosing a broker, as that can make or mar your trading mission. Go for an ECN broker that is regulated by any of the tier-1 financial authorities, such as CFTC, FCA, ASIC, or ESMA. Avoid market makers or dealing desk brokers because they take the opposite end of your trade, which creates the condition for a conflict of interest.

9. Open a Cent account

If you have found a good broker and you have a strategy with good positive expectancy, go ahead and open a Cent account with a hundred or two hundred bucks and trade consistently, risking $1 per trade. The idea is to learn how to execute your strategy properly when your money is on the line so that you can master your trading emotions. It is a very vital step; you cannot learn trading psychology without trading a live account. Starting small helps you achieve the emotional while risking a little at a time.

10. Increase your account size

When you are comfortable executing your strategy on a cent account, you may gradually increase your account size and trade size. After each increase, trade it for some time until you are comfortable trading at that account level before you increase again.

11. Continue part-time swing trading

Now, you are boldly making your journey in the trading world. It is going to be a very tortuous journey, with many bumps along to road. You may fail many times, but be ready to jump back up and continue marching forward. Your passion will help you here, but even more important is having other sources of income.

When you have other ways of making money to cover your bills, you won’t feel the effects of your inevitable falls that much. That is why swing trading may be the best for you because it will give you the time to engage in other money-making ventures.

Final words

Yes, forex can make you a millionaire, but you have to work very hard to achieve that. You must learn the skills, raise a good enough trading capital, have a good source of income, and develop a growth plan.