How much do traders really earn, and how do they manage their finances? Forex trading salaries can be shrouded in mystery, so we've decided to dispel some myths. This week we're talking to Widy about his income as a forex trader.
Welcome to Money Diaries, our new blog series in which we talk to different traders about the money they make, how they manage their finances, their savings goals - and their money advice to other traders.
Money Diaries: Widy
What is your income from trading?
My income from trading forex is around $100 - $500 - not regularly per month. If I have enough time to trade full-time, I believe my trading income can be consistent or even increase.
What did you earn when you first began trading, and is that different now?
When I first started trading 10 years ago, I didn't earn anything - instead I lost my entire $100 capital in less than an hour, at first OP. But it happened in 2009 when I was just getting to know forex for the first time and had no trading knowledge. Now that's all different: I can manage my account very well, ten years without getting hit by MC, never getting a stop-out and I'm also able to manage the risk of every trade.
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Do you work full-time or part-time?
I am currently trading part-time, more as a "trading for skill" rather than "trading for living". To live and meet daily needs, I still rely on other jobs.
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What are your savings goals?
In terms of the financial aspect, my savings goal is to have enough money to finance all the needs of my big family. In terms of conditions and professions, my future goal is to become a Fund Manager in a prop firm and also a "PAMM Trader" in forex brokers.
How do you manage your finances as a trader?
As a trader, I manage my finances by depositing 10% of the money I receive from other jobs into my forex account. I'm not worried about losses or total loss of capital, because I already know how to trade forex properly.
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How do you decide how much to risk per trade?
I risk 1% - 15% on each trade. Only single OP until the order hits TP or SL. The risk of 1% - 15%, in my opinion, is not too small and not too big, because it's adjusted to my deposit which is not too big. If the order hit SL, I can accept that money loss and if I get profit, it's proportional to the amount of capital.
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How does your risk management play a part in your financial management?
It is very important to manage risk. I learned this the hard way 10 years ago when I lost all my money because of trade without calculating risk, opening orders only because I was sure of the direction of the trend, which turned out to be a fake trend, which in turn meant I ended up losing my capital.
The importance of risk management is to avoid bad events like this. Gamblers may be familiar with this, but because I have long-term plans in forex, and want to become a Fund Manager at a prop firm, then I have to use a different strategy and technique than most other traders.
What do you think is the biggest misconception about money and trading?
I see a lot of traders on social media showing off their profit results. In my opinion, money can be obtained from anywhere, including other jobs outside of forex, but when it comes to forex trading, the best thing is when we can manage risk well - and in the end we'll get to profit from trading.
What are three pieces of advice you would give to a new trader about money expectations and money management?
Some words from me for novice forex traders:
1. Invest your time with trading knowledge - not your money, and do not give your money to someone else to be traded for you.
2. Use a demo account to develop skills. If you have traded with a live/real account and you're uncertain about market/trading conditions, just go back to the demo account to learn again.
3. If you want to work with a prop firm, focus on increasing the "Sharpe Ratio", not the profit money value.