5 Harsh Realities of Making Money in Forex

Are you sick and tired of self-proclaimed trading experts (internet marketers) telling you how easy it is to make money from Forex?

You know that Forex is not easy.

The problem is that most sites wont tell you how hard Forex can be. In fact most sites say Forex is easy. Most Forex websites do not tell you the truth about Forex.

So……. I will tell you.

Harsh Reality 1: Forex is Never Quick and Easy

Most new traders think Forex will be easy.

They see advertisements promising quick and automated riches with a Forex robot or something equally irresistible. They dive right in blind to the dangers and they get hurt.

Big Surprise….. FOREX IS NOT EASY!

In fact anybody who tells you Forex is easy is lying. Check out this ad below:

a scam forex ad parody

Would you buy this product?

Why not?

You could be a lawyer in 30 days, you could work for a prestigious law firm earning a six figure income.

You would not buy the product because you know its a lie. Getting a law degree requires half a decade of study. There is no way you can become a master lawyer in under a month.

Forex might not be as hard as law but the same concept holds true. No product is going to make you a master trader in a few weeks. No EA (Forex robot) is going to make you consistent profits while you sleep. Forex just isn’t that easy!

If you are here for easy riches, got to a casino, you will have better chances there!

Harsh Reality 2: Most Systems are Useless

Most traders waste time searching for the perfect trading system.

When looking for a system the first stop is usually popular Forex forums. If you see a system with great feedback and many users it must work right?

Wrong!

Most trading systems on popular Forex forums are created by inexperienced traders. The systems may work well for a few weeks, or even for a few months, but they fail in the long run.

This is especially true of indicator based systems. Indicators are sensitive to changes in market conditions. Some indicator based systems give amazing signals in trending markets but fail in ranging markets. The problem is that most indicator based systems are not adaptable to changing market conditions. So a system that works this week might not work next week. If a trading system has not been forward tested for over a year you cannot trust its effectiveness.

If you go down the path of hunting for Forex systems you have already failed. You will embark on a long, fruitless search and find nothing.

My advice is to start with the basics, learn how to read price action and how to place Support and Resistance areas. Once you learn those two things you will not need to find a trading system.

Harsh Reality 3: Demo Trading Won’t Prepare You For Live Trading

Imagine a mean looking, tattooed biker approaches you. He pulls out a shotgun, points it at your chest and demands your wallet. What would you do? Chances are you would probably hand over your wallet pretty quickly.

Now imagine an scrawny little eight year old kid approaches you. He pulls out a water pistol, points it at you and asks for your wallet. What would you do? You would probably laugh.

This may sound absurd but there is a correlation. When you trade a demo account you are not using real money. So the fear and apprehension of risking real money does not impact your performance.

A demo account is like the little kid above, it is play money, you can laugh it off and move on.

A real account is like the biker above, the fear and the intimidation of trading real money impacts your actions.

Psychological factors may seem insignificant but they are very significant. Most new traders perform extremely well on demo accounts but fail abysmally on live accounts. Psychology matters and demo accounts do not prepare you for real trading.

Demo accounts do have their use. They are great for familiarizing yourself with a trading platform and learning basic trading concepts. They are also good for basic testing of a trading system.

Harsh Reality 4: You Need Time

So many websites tell you that you can trade Forex successfully with less than one hour of work per week.

The reality is that you need to invest a lot of time into becoming a profitable trader. If you can only find a few hours each week to dedicate to Forex you should probably give up.

Learning to become a consistently profitable trader takes a lot of time. You need to be prepared to set aside several hours a week to study Forex. According to scientists it takes 10,000 hours of practice to master something. I doubt you need 10,000 hours to become a profitable trader. However, you will need more than two hours per week.

The good news is that once you are profitable it is possible to cut your trading time down to a few hours per week. Currently I trade around two hours per day four days a week.

Harsh Reality 5: Adapt or Die

The Forex market is constantly changing. You need to be able to adapt or you will never make it.

With a constantly changing market a trader need to be able to make changes on the fly and adapt to current situations. So, a good trade knows how to adapt quickly to a changing market.

When the market throws something unexpected at you, you need to be able to analyse the best course of action and make a decision quickly.

My trading method is based on price action. Right now I concentrate almost exclusively on reversal trading. This is because since 2010 the average daily range of Forex pairs has dropped. GBP/JPY used to range 280 pips per day and know it ranges 120 pips.

When markets are not ranging breakout trading becomes hard. My trading method was adapted from trading breakouts to trading reversals in 2010. When pairs start to range again I will probably adapt to market conditions and begin to trade breakouts.

A good trader needs to be ready to adapt quickly to changing markets.

So, Should You Bother Trading Forex?

Well, that is up to you. We all know that the vast majority of new traders fail. They fail because they expect no stress, fast and easy riches.

You cannot change the harsh realities above. However, you can accept them and get on with it anyway.

Trading is tough but you need to be tougher. You need to work hard and you need to persevere.

Will it be hard? yes.

Can you make it a little easier? yes…….

The Next Step

The reason I first started www.forex4noobs.com was to help new traders become professional traders. That is why this site is packed with stuff to help you along the road from beginner to pro. So if you want to get on the right path take a look around the site.

If you are completely new to Forex you should start with or basic Forex education section.

If you know the basics you should check out our free Forex course. In the video course I show you many important things you wont learn anywhere else. I show you how to put together a highly effective trading plan, money management plan and trading diary. I even explain how to put together a trading strategy.

For free analysis and trade ideas check in to this blog regularly.

Finally if you want a proven trading strategy along with a private members forum where we discuss trades check out the advanced Forex Price Action course. It is closed to new members right now but if you throw your email in I will contact you in the next few weeks about getting access.

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45 thoughts on “5 Harsh Realities of Making Money in Forex
  1. That is really a great info….and the misconception about Forex fool many beginner taht the learn the hard way…

    1. Unfortunately when people learn the hard way they often decide to quit. That is the point of this post I want to make some things clear to new traders from the start so they do not go down the wrong path.

      Thanks for the comment.

  2. Hey Nick. I needed to compliment you on this. I marked up my Euro chart earlier this week with the support and resistance zones which you had layed out in your email. Like a magnet, price bounced high and low on these zones all week. Your analysis was spot on! Well done!

    Glenn 

  3. Thanks Nick. I really appreciate what you make available each week to the forex trading world.It is wise, sensible and no nonsense advice. I have tried most of what you have mentioned in the above article and it doesn’t work. no quick road to riches. Work, educate, discipline and time are vital. I hope one day I do make it :-) Thanks again.

    1. Hope you do to man. You are on step ahead of most if you realise and accept that hard work, discipline and time are vital.

  4. Nick, thank you very much for the advice! Sometimes, we need that, despite of the lots of bogus ads we see on the web!

  5. Thanks Nick, I can perceive great experience and truth in your thoughts. After the “fruitless search /nothing found” phase I’m ready for back to basics. Like your forex4noobs very much and your method too. Hope to enter the advanced price action corse soon.
    All the best.  

    1. Thanks Nordy. Back to basics is good, once you learn basic Price Action you will see the market in a different light.

    1. I think demo accounts most certainly CAN help. A demo account is a necessity for a new trading system you are trying out. You need to practice that new trading system on demo first to see if it works. After you are confident it works, then the next logical step is to trade a live account. Obviously the best thing to do at that point is to trade with a small amount of money (such as a micro acccount) and work your way up to larger amounts of money to trade.

      My point is, I do not agree at all if anyone says a demo account is useless (for the very reason I’ve just mentioned).

      1. Topgun, I am not sure if this comment is intended solely for Max or for me too. However, I did say in the post that demos are useful for testing a system.

        “Demo accounts do have their uses. They are great for familiarizing yourself with a trading platform and learning basic trading concepts. They are also good for basic testing of a trading system.”

  6. Adapt or die is perfect for any business not just Forex. The problem is that nobody teaches us how to adapt or when!

    1. Take a look at the Free Forex Course. In one of the lessons I explain how to adapt to changing markets.

  7. Love the lawyer kit!  But I’m holding out for the neurosurgeon kit.  I hear that one only takes 14 days. 

    Thanks for all the posts Nick.  Much appreciated!

  8. This is clear and realistic advice which gives an accurate perspective of forex trading. Anyone who is serious about becoming a trader should be prepared to put in the time to study and not expect forex to be like the proverbial goose that laid a solid gold egg!

    As for “Adapt or Die” – the ability to analyse price action delivers the ability to adapt.

  9. I am new to trading, I am learning from my nephew who has been trading since 2008, I found your site 2 days ago it is very enlightening and full of information that is much more interesting and easy to use i love your format for setting up your charts its plain ans simple looks very easy to use although i havent quite used it yet because of to weekend but i will be using this strategy for myself. Do you have the support and resistant areas for the eur nzd? I am so very happy to have found this site and thank you so much for your knowledge, assistant and your time for putting all this together

  10. I am currently a court interpreter for the Superior Courts of California. Sadly, over the next few months I will be losing my leg to bone cancer.

    I am slowly leaving the courts and doing only private matters. I need to look for a new source of income within my upcoming limitations and would like to know if you and your program could assist me in this endeavour

  11. Great advice to newbs dude. Focusing on fundamentals is key in forex, (no offense technicians) as it is with any form of investing, although technical indicators are useful also, (MACD, and CBOE VIX) As you stated, you can make money in forex with time and dedication. I failed three times before my fourth turn, and I have to constantly adapt to data/news releases and market sentiment. So many factors effect price movement and new traders try to trade 3-6 currency pairings. Glad to see that others out here are trying to help people.

  12. I have actually researched the website to know if any one has made it through forex not only was my finding discouraging but intimidating. I lost my job few months ago and I decide not to look for job again but to learn and settle down trading forex but could not make head way with demo nor understood the jagons in MT 4 platform.
    My question Is this CAN I MASTER AND MAKE MONEY FROM FOREX? CAN I TRADE FULL TIME ON FOREX TO MAKE AT LEADT $200: a month? Please reply

    1. Sorry Davidson but no, you can’t. If you can’t even control your urge to spew in caps, you won’t last a day out on the stock exchange!

  13. I really enjoyed this article, but I have to respectfully disagree that demo accounts will not help traders with their real accounts. I agree that there is a LARGE portion of success in trading which is attributed trade psychology, but I expect that every trader learning to trade should use their demo account for practicing technique in real time, and managing “real” trades – which should in turn should help with comfort and confidence in trading real money (or at least it did with me). Back testing can only help so much, but real-time trading with “monopoly money” certainly helped me with knowing how to do things in real-time.

    Thanks for the info, Nick! Keep up the awesome work!

    – Jay

  14. Hi I have been trading forex for a while some times i win most of the times i loose. I am into price action, but still something is wrong.

  15. I have never traded before and I am interested in learning how to trade the forex mkts. with some degree of knowing what the “hell” I am doing. I do know a little bit of the basics but I am sure not quite enough. I need to also learn how to move around the trading platform in order to be able to even place a trade, when to open and close a trade, etc.

    Can you folks actually teach a complete “newbie” such as I?

    Feel free to respond to my e-mail with suggestions.

    Take care and be safe,

    donnie

  16. I’ve been studying the forex market for about two years now. And I’ve yet to invest one dime In the market, not one trade. I suppose you could say that I have an associates degree in Forex.

    My research has been painstaking, I have read books, articles, blogs and academic studies. The information I have obtained ranges from fascinating and practical to nonsensical and outright absurd. The Forex instruction industry is a place where lazy dreamers and crafty charlatans feed off one another. Ulitil one group is ultimately devoured, guess which one? You are the first person to be truthful upfront, and I thank you.

    One thing I do agree with is, it all (seems to) come down to support and resistance, price action, (strict and unwavering) money mgt. and possibly most importantly, psycology/ human nature. (However; volume seems to be a factor. Though in forex you’re dealing with tic volume.)

    And another thing I have learned is (the point which you stress so stongly)….THOSE WHO CANNOT ADAPT ARE DOOOOMED [thunder clap for dramatic effect] Most “systems” are indeed, one trick ponies which will quickly fail when markets shift. Markets are in aconstant state of flux, Prof. Andrew Lo will tell you that.

    Do I have what it takes? I’ll know that only when that burley tattooed biker points that shotgun at me. All the theory and planning in the world can’t prepare you for that. Basic training does not create soldiers, combat does.

  17. Good to know about this, especially who are beginners in trading. Always be prepared and you need to accept every harsh time when you trade. Thanks for sharing this idea and I will share it with my friends too!

  18. Thanks for this revelation ,I was told that forex trading is where I will make money quickly but opposite of what I was told. Now I know better, once again thank you.