How To Trade Currency and make $5,000 per month part time

You can make $250/day, which equates to $5,000 per month over 20 trading days in the forex market. Assuming you have a good forex education and enough practice, the big question then becomes: how much money should you start with?

Well, lets see how this looks:

• A typical stop loss should be at least 30 – 60 pips. For a standard account (at one lot), that equates to a potential loss of $300 – $600 on a trade.

• If you plan to trade one standard lot and make $250 per day, you will need to capture a net gain of 25 pips. This is very realistic with a standard account.

• Normally, it is good practice to trade with a risk:reward ratio that gets you $2 for every $1 you risk, however based on the above, you are not going to risk $600 to make $250 for each trade. Rather, you will risk the closest amount, which is $300 (the minimum 30-pip stop loss we talked about) . Since you want to maintain a risk:reward ratio of 1.0:1.0 for these trades, you should be aiming to make at least $300 for each trade. We can therefore increase our daily income target to $300 (instead of $250) in an effort to maintain our risk:reward ratio.

• You don’t want your 30-pip ($300) stop loss to ever exceed 2% of your account balance so you will need a decent bankroll to start with. Ideally, if you are conservative, you should risk only 1% of your account on any given loss from a single trade. With this in mind, you will need a starting capital of $30,000 if you’re at 1% risk and $15,000 if you’re at 2% risk. These are the bare minimum amounts you must have. Since you won’t know which days will incur losses and which will produce winning trades, you would be wise to have an additional 10-15% more in your account, above and beyond the minimums so that you’re protected (so, $33,000 at 1% losses and $16,500 at 2% losses). This way, if you incur a string of losses before a string of wins, you won’t ever be incurring losses that are more than 2% of our account.

Most traders make the mistake of thinking that they can start with $5,000 or less and still make $300 per day. Is that possible? Yes, of course. But, it’s more risky. If you have even one loss, you will loose as much as 7% to eventually 10% of your account on each trade. This will most definitely weigh in on your emotions, not to mention your wallet! What do you think will happen to your mindset after your third or fourth loss, when you have lost 25% of your account? Do you think you’ll be making wise trading decisions then – the short of decisions you would make if you were of a calm and relaxed mindset? Considering that 90% of traders loose money in the forex market, you can safely conclude that more losses will occur in this scenario. Typically, most traders who start out for the first time blow up their accounts for this very reason.

Make no mistake: you need a decent bank roll to get started with currency trading. As per the example above, you can start a standard account with as little as $15,000 but make sure you’ve had plenty of practice and incurred losses on a mini or micro account so that you can become a pro and reach your income goals when you attempt to trade your $15,000 of capital in a standard account.

A good way to start, if you’re fresh out of ‘forex school’ is to setup a $300 micro account and make all your mistakes on this little account. Trade, fall down, get hurt, learn, get right back up upon the horse again and set the stage to perfect your trading style. You will then be able to make $6,000 per month out of a small bank roll of $15,000 (or, err… $16,500).