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Forex Trading Return on Investment
Speculators who trade currencies do so to make money. They devote substantial time, effort and capital to this endeavor. Ideally a Forex trader wants to make the most money in the least amount of time and with the least risk. He also wants a sizable return on investment of trading capital. What is a good Forex trading return on investment? How does a trader calculate his Forex trading return on investment? How does a Forex trading return on investment compare to putting money in treasury bills or starting a storefront business?
When You Leave Your Day Job
If you have decided that you want to make your living trading day trading Forex you expect to at least make the same money as the work or business you are leaving and hopefully do so with less time invested and with less capital as well. This a practical approach to trading that should not be forgotten while learning the ins and outs of trading currencies.
Initial Investment and Ongoing Cost of Doing Business
To successfully trade Forex you will need a trade station, trading software, a fast and reliable internet connection, and the skills to use these tools. You will need to learn the skillsets of fundamental and technical analysis that help you make money from the normal fluctuations in the Forex market. The trade station and software are initial investments that can be depreciated from a tax viewpoint. The cost of a good internet connection is ongoing, a business expense, and should be considered when keeping track of net profit or loss. To the extent that you choose to attend online seminars, pay a trading coach, or subscribe to an alert service these costs should the considered in calculating Forex trading return on investment. Then do not forget fees and commissions incurred in trading. Trade too much on poorly conceived trades and you will lose money. You make think that you are making money but at the end of the day the cost of trading may equal your profits. You will need to trade to have any Forex trading return on investment. However, there are always days when sitting on your hands is a better choice than trying to outguess the market.
Picking the Best Approach
There are lots of strategies for trading Forex online. In the end picking a profitable Forex pair to trade and doing so with skill will lead to profits. An aggressive approach can lead to exceptional profits and a conservative approach the help you avoid catastrophic losses. Profitable currency trading often has to do with auditing your results.