How many of us will succeed in Forex?
Submitted by Edward Revy on March 22, 2008 - 19:40.
Many of us have probably heard the statement that 95% of beginners lose in Forex and remaining 5% become successful.
A common trading journey in Forex starts with demo account and develops into live account with further positive or negative outcome.
We have made own simple research that was aimed to find out how long on average traders plan to demo trade Forex before going live. We offered traders to vote on our Poll. Here are the results:
Although it would be wrong to state that these are exactly the results that prove the theory of "95% to 5%", the data came out to be quite interesting.
Traders who planned to invest real money after 1-6 months of demo trading formed 68% of all voters. There were 17% who were giving it about 1 year and 6% who said they will demo trade for 2 years or more.
Our research cannot provide an insight whether all those traders will change their minds about going live in Forex after stated period of time, but we may presume that many of them will more or less stick to their plans.
You have probably already made your mind about the option you’d vote for in our poll above.
Let’s see how many of us will succeed in Forex?
If you have chosen to open a live Forex account after 1-2 and up to 6 months of demo trading, your chances to successfully manage your live account are quite slim. Exceptions happen, but we speak about majority of Forex traders.
The reason why we made such verdict is because no matter how much you study Forex every day, 6 months is too little to gain all necessary experience and digest enormous amount of information about Forex trading, plus be able to test it long enough in order to confidently invest money relying on knowledge gained and start trading successfully.
Traders that were willing to dedicate about 1 year to demo trading had most likely been already demoing Forex for some time and gained some initial experience, that allowed to analyze the time needed for proper learning and research more realistically. These traders have initially higher chances to manage live accounts properly, but would need much more time to be able to achieve stable performance. Their risks of sooner or later losing it all are still high; therefore, unless they consider at least another year of practice and studying we may add them to our initial 68% group of risk. Total would be 85% now.
Again, why we are so strict bout the verdict? In any field professionalism is never achieved in no time. Students study for 5-6 years in universities to obtain a profession, a sport champion has to work on his body and skills for years before receiving his first gold medal.
Learning Forex in one year won’t make most of us financially independent.
The category "no need for demo" lists both: traders who voted for immediate opening of real account in Forex and learning while trading live, and traders who already had real accounts. This category was made to help maintaining quality of votes on other voting options.
And finally we have the remaining 6% of traders who planned to demo trade and practice for 2 years or more before going live. This small group has the highest potential to make it right and achieve its financial goals in Forex. We can only add here a well known wisdom: "Success in anything you do lies in hard work, continuous learning and passion for tasks set and choices made".
What is our advice after all?
If you happen to be in the 85% group, simply plan for further studying and testing and later open a live account with more serious approach.
If you belong to remaining 6% of traders, move on and stick to your plan.
What practical value does this research have for an average Forex trader?
With some exceptions (which we all wish to be a part of, but let’s be realistic), there will be no quick profits in Forex and no financial miracles.
Demo trading is a great and free way to test your Forex trading skills and practice as long as it is needed. Being serious about investing real money, means being serious about learning how to manage them in artificially created conditions.
But, let’s don’t forget about live trading!
Live trading is even much better way to learn about real challenges in Forex. Many Forex traders confirm that after trading with real money they had to revise their views about Forex trading.
It is highly advised to open a real trading account to get a taste of real Forex. Caution! Don’t rush in to earn money with your first live account, approach things wisely.
If your trading skills aren’t truly outstanding so that you can confidently manage large funds, do not invest a lot in your first live account. Consider you new live account as live-test account. Test your live skills by managing a small balance and trading the smallest lots possible(!): up to 1000-2000 units, so that your balance won’t be affected much even if your first trading attempts result mostly in losses. Find a broker that allows to open a mini account and trade with small lots.
And finally, our scheme to success in Forex:
Demo trading – live-test trading – live trading
Between each stage at least 1 year of trading experience.
To your trading success!
Edward Revy and my best Forex strategies Team
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