How to Make Money Forex Trading

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Contributor, Benzinga
September 19, 2023

Global economic factors impact currencies tremendously, resulting in significant exchange rate movements. While the volatility of currency pairs is lower than that of most stocks, experienced forex traders can use the higher leverage available to them combined with market analysis to generate trading profits. 

To increase your chances of making a profit trading forex, you at least need to know the basics about how the market operates and what moves it. This guide provides essential knowledge about getting started in forex trading and sets a solid foundation for you to build upon to earn money by trading currencies.

Disclosure: CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

How Does Making Money Trading Forex Work?

Forex traders take positions by buying or selling one currency against another since currencies trade relative to each other in pairs at a quoted rate of exchange or exchange rate. 

If you’re bullish about a particular currency pair, you might open a long position in that currency pair at an advantageous exchange rate and wait for the currency pair’s exchange rate to increase before you lock in profits. If the exchange rate you close the position at is higher than where you bought the pair, you’ve earned a profit equal to the difference between the two exchange rates.

The inverse applies to shorting a currency pair. If you believe the value of the base currency will decrease relative to that of the other currency in a pair, you might sell it or go short. The goal is to sell the currency pair at the highest exchange rate possible and then close the position once the exchange rate drops. Closing the short position at a lower exchange rate than where you sold it will earn you a profit. 

6 Simple Tips for Making Money Trading Forex

Beginners need to ensure they follow several key measures to increase their chances of being profitable forex traders.

1. Learn the Basic Forex Trading Terms

Understanding the jargon that forex traders often use helps you to communicate with other traders accurately. It can also help you gain a foothold on what’s required to analyze currencies effectively. 

Currency Pairs

In the foreign exchange market, currencies are traded relative to one another in pairs. Currency pairs are categorized as majors, minors and exotics depending on the volume traded. When the U.S. dollar is not part of a currency pair, it is known as a cross. Majors typically have the largest trading volume, tighter dealing spreads, higher liquidity and lower volatility compared to other forex pairs. The most actively traded major currency pair is the euro quoted in U.S. dollar terms that is written EUR/USD in market shorthand. Minors include the commodity currencies and the Scandinavian currencies quoted against the U.S. dollar, such as the New Zealand, Canadian and Australian dollars. Exotic currency pairs involve less-traded currencies from developing countries such as the Mexican peso and the South African rand.

Point in Price (pip) 

A point in price or pip is the conventional minimum exchange rate movement allowed in a particular currency pair. For most pairs, a pip is a 0.0001 move in the fourth decimal point of an exchange rate, although for some pairs, like USD/JPY, a pip is a 0.01 move in the exchange rate. Using EUR/USD pair as an example, the smallest unit move this currency pair exchange rate can make is $0.0001.

Base Currency and Quote Currency 

The left currency in a currency pair is known as the base currency and the right currency is the quote or counter currency. Charts reveal the movement of a base currency compared to a quote currency. If the price on a chart rises, it means that the base currency has strengthened against the quote currency, which has weakened. The opposite applies when the price decreases.


A bid is the exchange rate that a market maker quotes to buy a specific currency pair. 


The offer is the exchange rate that a market maker quotes to sell a particular currency pair. A market maker’s offer rate will generally be higher than their bid rate.


Unless you tell them your desired trading direction, forex market makers and brokers generally provide bid and offer quotations for the exchange rate of the base currency expressed in terms of the quote currency. The difference between this two-way quote is known as the dealing spread or the spread. Widening the dealing spread relative to the Interbank forex market provides an income stream for forex brokers. Some brokers also charge additional trading costs, such as a commission or a per-trade fee.


A lot is a trading unit that represents a minimum transactable amount of a currency pair traded at an online broker or on a futures exchange, although lots are generally not

 used among those operating in the over-the-counter Interbank forex market. As a retail forex trader, common lot sizes include standard lots of 100,000 base currency units, mini lots of 10,000 units, micro lots of 1,000 units and nano lots of 100 units. 

2. Find a Reputable Forex Broker

Trading profitably may be worthless if you’re unable to withdraw your trading gains. Some unregulated and disreputable online forex brokers scam their unsuspecting clients by unfairly restricting them from accessing their margin account funds, so be sure to choose a reputable broker.

A good forex broker will show its commitment to securely handling its clients’ funds by submitting to regulations from established financial authorities. Being regulated also indicates that a broker aims to abide by high ethical and financial standards. 

3. Start With a Demo Account

Seeing a professional trader make money trading forex can make you eager to start immediately with a live trading account. Replicating those positive results with your own money and lesser experience level can be challenging, however.

To get a good grasp of how the foreign exchange market moves and how a trading platform functions, beginners should start trading in a demo account first. Losing virtual money is easier to handle emotionally than losing your hard-earned cash, but demo trading does give you a taste of what to expect when you go live.

As a novice, you can use a demo account to practice FX trading so that you can avoid the discouraging experience of losing large amounts of money while you are learning to trade. Even experienced traders will often use a demo account to check out a new broker and to test and practice using a new trading strategy in a real-time environment. 

4. Begin With a Small Investment

Even if you’ve already grasped the basics of trading forex using a demo account, it’s best to initially only put a small amount of your trading capital at risk when you first open a live account. Don’t risk more than you can handle losing. It’s easier to accept losing a small amount of money than a large amount, regardless of how much money you have.

5. Learn Strategies to Help Maximize Trades

Don’t expect to become a profitable forex trader after attending a weekend trading course. Learning different trading strategies, market analysis and how exchange rates move requires time. Take as much time as you need to practice in a demo account, and ensure you’ve been consistently profitable for several months before switching to a live account.

You’ll also want to learn how to read charts, use technical indicators and employ different trading strategies to optimize your chances of success. Also, study the fundamental factors that impact currencies and make their exchange rates move.

6. Keep a Trading Journal

To avoid repeating mistakes, you need to keep and refer to a trading journal. Keeping a record of your trades provides valuable insight into how you viewed the trade and your thought process before you entered and exited it. Those are valuable metrics for you to use for making better future trades. A trading journal also provides you with the ability to learn from unsuccessful trades.

Example of How to Make Money Trading Forex

Let’s use an example of how to make money trading forex.

Select a Currency Pair

You might decide to trade the most popular currency pair, EUR/USD, because it tends to display the tightest dealing spreads and a relatively smooth market.

Choose Your Forex Trading Strategy

You can trade forex in the spot, forward and futures markets, although the vast majority of forex traders will use the spot market to trade currency pairs in real time. Trading forex as a beginner usually means opting for spot trading. The over-the-counter forward market allows traders and hedgers to enter into a contract with a market maker to secure a rate to exchange a specific amount of one currency for another on a future delivery date. The futures market operates on an exchange where currency pairs trade in multiples of specific contract amounts for standardized delivery dates. 

Analyze the Chart and Open a Position

Opening a long position in a forex pair means that you believe the base currency will rise versus the quote currency. Going short the pair means you expect the base currency to decline versus the quote currency.

Using EUR/USD as an example, you might be bullish on the pair and believe the euro will strengthen against the dollar. You’ll therefore want to open a long position in the EUR/USD pair at the lowest possible exchange rate.

After using technical analysis to analyze the EUR/USD exchange rate chart for support and resistance, and after checking for any relevant fundamental factors, you might target an exchange rate of 1.000 to buy euros and sell U.S. dollars.

Manage Your Risk

Traders often manage their risk by placing stop-loss orders. A forex stop-loss order closes a trade in a currency pair at the best market price when the market goes against your position to trade at a predetermined exchange rate that is worse than the present market rate. 

Your loss in pips will be the difference between the opening exchange rate level and the level the stop-loss order was executed at. Keep in mind that since stop-loss orders are executed at the market, some slippage may occur between the level you set and the level your transaction was executed at.

If you’re long a currency pair, then your stop-loss sell order needs to be placed at a lower exchange rate than the current spot market rate. If you’re short, then your stop-loss buy order will need to be higher than the current spot rate. 

It’s usually best to allow the market some room to move, so don’t place stop-loss orders too close to the current spot exchange rate since stops can be triggered by background market volatility, causing you to suffer a loss even though your initial trade idea would have ultimately been profitable. Also, avoid exposing yourself to excessive losses you cannot afford to take by placing your stop-loss orders too far away from the current market rate.

In the above example, if you entered a long EUR/USD position at 1.000, you might decide to put a stop-loss sell order in the market at 0.9900 to close out your trade automatically if it goes against you enough for 0.9900 to trade. If your stop-loss order does get executed, then your loss would be (1.000 - 0.9900) or 100 pips plus slippage.

Close a Trade

A take-profit order is placed to close out an existing trading position at a better level than the current market spot price. This sort of order can let you lock in profits if the exchange rate ever reaches your desired target level.

Using the previous EUR/USD example, you might enter a take profit order at 1.0200 to close out your long position at a profit. If the exchange rate reaches that level and the take profit order is executed, your profit will be the difference between 1.000 and 1.0200, or 200 pips. If you traded in the amount of 1 standard lot of 100,000 base currency units, your profit will be (100,000 x 0.0200) or $2,000. 

Best Forex Brokers for Beginners 

Ensure your profits are safe by only engaging in currency trading with a reputable online forex broker. Benzinga has compiled a list of the best online forex brokers below.

  • securely through's website
    securely through's website
    Best For:
    Forex Trading
    Read Review

    CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 72% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money.

  • securely through AvaTrade's website
    securely through AvaTrade's website
    Best For:
    Non US Forex Trading
    Read Review
  • securely through IG Markets's website
    securely through IG Markets's website
    Best For:
    Forex Execution
    Read Review

    Trading foreign exchange on margin carries a high level of risk, and may not be suitable for all investors. Before deciding to trade foreign exchange you should carefully consider your investment objectives, level of experience, and risk appetite. You could sustain a loss of some or all of your initial investment and should not invest money that you cannot afford to lose.

  • securely through Plus500's website
    securely through Plus500's website
    Best For:
    Mobile Users
    Read Review

    86% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you can afford to take the high risk of losing your money.

  • Securely through Interactive Brokers’ website
    Securely through Interactive Brokers’ website
    Best For:
    Active and Global Traders
    Read Review
  • securely through HYCM Capital Markets's website
    securely through HYCM Capital Markets's website
    Best For:
    Forex Trading
    Read Review

Practicing Risk Management in FX Trading

Making money forex trading requires a combination of knowledge, skills, and a disciplined approach. It is important to educate yourself on the fundamentals of currency trading, including understanding currency pairs, market analysis, and risk management strategies. Developing a trading plan and sticking to it, along with practicing patience and emotional control, can greatly increase the chances of success in this volatile market. Continuously monitoring and adapting to market conditions, as well as staying updated on global economic news, can help traders make informed decisions and capitalize on profitable opportunities.

Frequently Asked Questions


How long does it take to learn forex?


That depends on whether you already have experience trading financial markets. At a minimum, you will need to learn new market terminology, develop a successful forex trading strategy and gain expertise in technical and fundamental market analysis.  Having a good forex trading mentor can expedite the learning process considerably.


Is forex a good way to make money?


Trading forex has more in common with gambling than investing. Since you must take risks to make money trading forex, you generally need to use a profitable trading strategy to make money consistently as a forex trader, and only a small percentage of retail forex traders manage to achieve this goal.


How much do forex traders make a day?


Beginner forex traders are lucky if they break even, whereas experienced retail forex traders can make several thousand dollars on a single trade, although profits will generally depend on the size of a trader’s margin account and the number of lots traded. Professional forex traders operating at major financial institutions in the United States are paid a decent salary averaging around $80,000 per year plus performance-related bonuses to make quotes to customers and take calculated risks with their firm’s money.

Get a Forex Pro on Your Side, registered with the Commodity Futures Trading Commission (CFTC), lets you trade a wide range of forex markets plus spot metals with low pricing and fast, quality execution on every trade. 

You can also tap into:

  • EUR/USD as low as 0.2 with fixed $5 commissions per 100,000
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