Trading forex, it’s a dirty job, but someone has to do it, though. Is it really a job? Although thousands of people consider forex as a career and go full-time, it’s still not structured like most traditional careers.
A better and less stressful method has always been for traders to be diversified and have multiple income streams independent from trading, especially considering economic instability.
The wonderful thing about the markets is no one has to be a slave to them. With various approaches, it is possible to have a career unrelated to any financial market while profiting from it.
One of the countless reasons retail traders fail to make consistent profits is treating trading like a typical job. The article will explore some useful concepts in this regard.
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Forex trading is more like a business than a job
There are so many flaws with likening forex trading to a job because they are structurally worlds apart. Firstly, no matter a trader’s skill level and experience, unlike a traditional job, no one can guarantee the exact profit they will make over a defined period.
In a standard career setting, an employee works a fixed number of hours. Assuming they’ve worked all the required days and met their contractual requirements, they receive some form of compensation or salary after a fortnight or month.
This payment is the total sum of what they’ve technically earned daily. Unfortunately, in forex, no such structure exists; it is usually unwise to expect to make money every day like in a job because no trader is paid by anyone to trade. Only professional traders hired by a financial institution have this luxury.
For retail traders, they must first wait for an opportunity or a trading set-up to manifest before executing a position. Even after that has occurred, there’s no certainty over whether that’ll yield the desired profits, if any at all. This is one of the reasons trading forex is akin to a business.
How is forex trading more like a business?
In any business, no day is ever the same. In many cases, no daily set amount comes in like in a nine-to-five. This figure constantly fluctuates. However, just like in trading, any enterprise’s profit potential can be significantly higher over the long run than the average job.
Both ventures provide the prospect of uncapped earnings, though these usually never come at predictable periods during a week or month. Also, the risk of being a business person is higher than working for one. For example, someone with a C-suite position in Amazon makes less money than Jeff Bezos because of the previous statement.
The main paramount similarity between a business and trading forex is how each measures its profits. While in a conventional occupation, someone measures their value weekly or monthly, the true success of any business or trader should rather be over quarters and years because there are countless variables the former group will not face.
Sometimes less is more in forex
The lack of patience is one of the big downfalls of a consistently losing trader who still treats their trading like being employed. In a regular profession, the employee will have specific tasks naturally occupying much or all of their time while at the workplace. In forex, there are no ‘tick box’ to-do lists in a day.
In other words, a trade should never occur for the sake of being occupied. Having this mentality is one of the causes of over-trading, which is another unfortunate reason why the success rate of traders is low.
With a job, in most cases, there is always something to do, except during breaks. If a worker is not doing anything outside this time, it is considered a red flag and may affect their ability to sustain that position.
In forex, this is not the case; much of the work that occurs isn’t even work at all. The only thing that should happen is patiently waiting for a set-up to form according to a well-defined trading strategy.
From a time accounting perspective, a successful trader would only spend 5% of their time or even less placing orders, checking trades, news, etc. Someone could sit in front of a computer at a job and do physical work, whereas, in trading, it’s the total opposite.
Quality over quantity
The quantity of someone’s trades often does not correlate with the profit potential of their trading system. Mathematically speaking, more set-ups or more markets could mean greater profiting opportunities, though the ultimate question should be the quality of these moments.
We could have a scalper and a swing trader. Let’s imagine the scalper places 100 trades and gains 10% in a month. The latter can also realize the same increase within that period, perhaps with only three positions.
Successful traders appreciate that to succeed does not require a job or work-like mentality of consistently looking for trades. It’s about best using one’s time to consider opportunities that could yield the most profit with minimal time and effort involved.
One of the attractions having many people interested in learning forex is the apparent promise that it’s predictable, ‘easy money.’ It’s a natural human emotion to look for security, whether through relationships or what we do for a living.
To the inexperienced, forex may seem to provide this surety because of the low entry barrier and its deceptive simplicity. Sadly, the only certainty in forex is uncertainty. Like any business, those who thrive in it appreciate these circumstances by acquiring the right skills to work around them.
They measure their profit success over a much more extended period and understand that treating their work as a job is not realistic nor conducive.