how to make 500 a day trading forex

How to Make 500 a Day Trading Forex in 2023: A Step-by-Step Guide

Who doesn’t want to make big and earn handsome profits in Forex trading? Everyone wants to ace this financial market and wants it to become a life changer for them. If you also want to earn hundreds of dollars from this market daily and wonder “How to make 500 a day trading Forex,”. You need not worry, as we will provide you with a basic framework of the whole trading journey that can prove to be the key stepping stone in your aim of making massive wealth by trading Forex.

So without much ado, let’s dive in deep and find out “How to make 500 a day trading Forex?” in a detailed manner so that you can understand what you are getting into and can make the best out of it.

How to Make 500 a day Trading Forex?

To enter the market and make big profits like $500 per day, you must first understand the Forex market, how trading works, and market trends. After that, develop a trading strategy, select a trading style and method, and adhere to it religiously. Following are the key stepping stones of how to make 500 a day trading Forex.

  1. Find a suitable broker
  2. Setup a trading account and add funds
  3. Understand the ongoing market conditions
  4. Choose securities of your interest
  5. Devise a trading strategy
  6. Enter the market and start trading
How to Make 500 a Day Trading Forex

Find a Suitable Broker

As for choosing a suitable broker to make $500 a day trading Forex, there are several factors that you should consider before signing up with any company or person.

Commission and Fees

Some brokers charge higher commissions and transaction fees than others, which needs to be addressed. Furthermore, look for the threshold amount (minimum) that the specific broker wants you to invest initially. Aside from that, it will help if you consider the fees the broker charges for various operations, such as annual fees, inactivity fees, trading platform subscription fees, and market data fees, among others.

Availability

Make certain that you can trade with the broker around the clock. When you need to make a quick trade, you don’t want to be stuck waiting for an opening or closing time.

Trading Platform

Moreover, choosing the right trading platform is critical for any trader because it can make or break their trading experience. The platform should be easy to use and provide access to all relevant information, such as charts, news feeds, and so on. Furthermore, customer support is critical if traders encounter any issues or problems.

Do Your Research

It will help if you also read reviews online about the broker before making your decision. It will help you determine if other people have had positive or negative experiences with the brokers.

Leverage and Margin

Leverage is using borrowed money to increase the potential return on investment. In the Forex market, it is used to increase the amount of money you can make by using a small amount of your capital. On the other hand, the margin is a financial asset and is the brokerage amount that allows traders to borrow money from the broker to trade. It is the difference between the asset’s price and the amount the trader borrowed from the broker. Knowing how the margin works is important because it helps determine whether you should take a trade.

All in all, the leverage ratio displays the degree to which the broker’s margin holdings have increased the size of the trade. Let’s understand this whole concept with the help of an example. For instance, if a broker is offering you a 1:100 leverage ratio, it means that with a $100 deposit amount, the above leverage ratio will increase its size by a hundred folds and you can make a trade worth $10,000.

Thus, you should look for a broker offering a high leverage ratio because this way, the profits will also be larger if you make the right trade with such a large trade size.

Set up a Trading Account and Add Funds

Complete your real trading account setup and ensure you understand your account settings and profile layout. The faster you understand this information, the faster you can start trading. It is worth mentioning that with the real account, the objective is to develop emotional self-control so that your odds of succeeding in trading are high.

It is worth mentioning that after setting up the real account, you must fund it to begin trading. You can select the “Trading Accounts” tab from the “Accounts” sidebar and afterward click the “Fund”; thereby, you can choose your funding method from the available choices like PayPal, credit card, Skrill, Neteller, or bank transfer. Once you have funded your account, you are ready to move toward the next step.

How to Make 500 a Day Trading Forex

Understand the Ongoing Market Conditions

It will be best if you understand the market conditions to devise a trading strategy that works best in it. You should analyze and speculate accordingly whether the market is bearish, bullish, or neutral and whether or not you should enter or exit any particular trade. 

Market Analyses

You can use different analyses to understand the current market conditions and speculate about future conditions.

Technical analysis

Using past market data and indicators like the volume and price of assets and the relative strength to predict where prices will go in the future. Traders typically have two options when using technical analysis.

They can trade the assets that have a high likelihood of trending but, for the time being, haven’t yet started trending. While this trade may offer higher returns but has more risk associated with it and requires more research on the trader’s part. 

On the other hand, the traders can trade assets that have already started trending, which may not make sizable profits but is less risky and requires less research on the trader’s part.

Fundamental analysis

Analyzing the company’s financial statements, researching how its industry is doing, and the current market situation to predict future price movement.

Tecno fundamental analysis

The decision-making process for a techno-fundamental analysis combines the technical and fundamental analyses that investors can use to identify potential investments and traders to make informed decisions on trading strategies.

Macroeconomics

Using news from macroeconomic indicators such as GDP, unemployment, interest rates, and inflation to predict the future price movement of a given asset or index.

Trading Indicators

Trading indicators give traders a clearer view of what is happening inside the market, which helps them make better decisions when trading. They are used by traders looking to enter or exit positions based on price movements and can be used to predict the direction of a stock, index, or currency pair.

Moving Averages (50, 100, 200 SMA)

Moving averages are the lagging indicators (as they change after the actual change in the price of an asset in the market) that help traders determine when to enter or exit a position.

RSI

The Relative Strength Index (RSI) is a technical indicator measuring the magnitude and speed of price movements. RSI has many uses in forex trading, such as predicting momentum or trend direction changes. 

If the RSI value exceeds 70, the particular currency pair is overvalued or overbought. So what happens is that that trader expects that to correct the price, there will be strong chances that the market will move towards pullback, and there will be a bearish trend.

On the other hand, if the RSI value is 30 or below, the particular currency is undervalued or oversold. So, what happens is that the trader expects that to correct the price, there will be strong chances that the market will move towards retracement and there will be a bullish trend, and in such hopes, they buy that currency.

MACD

The Moving Average Convergence Divergence (MACD) indicator is a trend oscillator used to determine trend direction and whether a trend has started or ended.

Traders use the MACD indicator to identify the strength of a trend. When the MACD line crosses above zero, it indicates that a new uptrend has begun, and it is better to enter the trade and buy the assets. When it crosses below zero, it signals that a downtrend has begun, and it is better to exit the trade and sell the assets.

Support and Resistance

One of the popular positional trading indicators involves support and resistance. Support and resistance levels signal a price trend and are used in many ways, such as identifying trade entry points or determining the best time to open or close a position. The support level is the price point below which a currency pair won’t fall, while the resistance is the price point beyond which the currency pair is unlikely to rise.

You can figure out the support and resistance levels by looking at the technical indicators, considering the previous points of support and resistance levels, looking through the peaks and troughs, and analyzing the historical price data.

All in all, you need to understand the market well to make the right trading move at the right time.

Choose Securities of Your Interest

In the Forex market, if you want to make big, you have to think big, choose the right securities that align with your trading goals and make the right move at the right time. All of us know that Forex is a highly volatile market where the value of currencies fluctuates. With the right market analysis and using the market indicators critically, you can make 500 a day trading Forex. Moreover, it will help if you trade the major currency pairs owing to their high volumes and liquidity. Following are the major currency pairs in Forex

  1. EUR/USD (Euro is set against the US Dollar in this euro-dollar pair)
  2. USD/JPY (US Dollar is set against the Japanese Yen in this dollar-yen pair)
  3. GBP/USD (British Pound Sterling is set against the US Dollar in this pound-dollar pair)
  4. USD/CHF (US Dollar is set against the Swiss Franc in this dollar-swissy pair)
  5. USD/CAD (US Dollar is set against the Canadian Dollar in this dollar-loonie pair)
  6. AUD/USD (Australian Dollar is set against the US Dollar in this Aussie dollar pair)
  7. NZD/USD (New Zealand Dollar is set against the US Dollar in this kiwi dollar pair)

It is worth mentioning that the major currency pairs are the most traded ones in the Forex market. Traders mostly trade these pairs because they have high volumes and low spreads, so it’s easier to make money on them than on others. This inverse relation between spread and volume attracts traders to these pairs as it gives them the power to easily enter or exit any trade.

To learn more about different types of currency pairs used in Forex trading, you can check out How to read currency pairs.

Devise a Trading Strategy

Trading strategies are an essential component of forex trading. It will be beneficial if you can find the best strategy for you and your investment plan. Finding the best trading strategy may appear to be difficult, but it does not have to be. Trading can be done using a variety of strategies. Some people, for example, use technical analysis, whereas others use fundamental analysis. Some people use trial and error to find the best strategy, while others rely on expert advice.

Choose Your Trading Method

You can use any fast-paced trading methods listed below to make $500 a day trading Forex.

Scalping

Scalping is a type of trade that does not require any particular type of trading style. What a scalper does is that he places several different orders throughout the day and holds the position for a little time, and can generate some points on each trade.

Day Trading

Day trading can be carried out over a range of time frames, and the person who can dedicate time to trading daily is known as a day trader who closes out all of his positions at the end of the trading day. Day trading is the hardest of all methods as it is a quick-moving trading format that needs ongoing supervision, and the trader needs to stay alert to avoid missing a buy signal.

Choose the Right Time to Trade

According to experts, the optimum time to make a Forex trade is when two large markets overlap. The biggest example of such overlap is the overlap of London and NewYork Forex markets, from 8:00 am to noon (EST). It is regarded as the time when the financial market is most active, with the maximum volume of trades and high liquidity. Moreover, from 2:00 am to 4:00 am, Sydney and Tokyo markets overlap, which isn’t as big as the London/New York one but still provides quite a good amount of opportunities for the traders.

Choose the Right Amount per Trade and Set a Risk Limit per Trade

Even if you want to win big and make 500 a day trading Forex, that does not mean you should forget about risk management and enter the market blindly. It would be best to choose how much you want to invest in a particular trade considering the results of your market analysis and trading indicators. It is worth mentioning that if you start Forex with a small deposit amount but want to make 500 a day, it will be better to invest in one big trade at a time instead of investing in many small opportunities.

Moreover, you must constantly be in control of the utmost sum you’re willing to risk on each trade because if you don’t, losses could mount quickly and cause you to experience those significant drawdowns that are so challenging to recover from. No one wants that, right? So this is where the stop loss comes into play: a stop order positioned at a certain place from the entry. Now what it does is that a market order will be executed as soon as the market reaches the stop level, and you will be removed from the trade. It will help if you set the stop loss so that you never risk more than 2% of your account on any trade.

Let’s understand this with the help of an example. For instance, you have $500 in your trading account. So risking 2% per trade means you are risking $10.

You can learn more about Forex risk management here.

Enter the Market and Start Trading

Once you are done with all your research and analysis, you can enter the market and start trading. People can take two main types of positions in this market: long and short. Your position determines how you profit from a currency’s price movement. 

Long Position

A long position is when a trader buys a currency to make a profit when the price rises. You are buying the base currency against the quote currency. Thus, if you hold a long position for EUR/USD, you are buying Euro and selling the US dollar and will gain profit if the value of the Euro increases.

Short Position

A short position is when a trader sells a currency at its peak value and then buys it again when the price falls to make a profit. You are selling the base currency against the quote currency. Thus, if you hold a short position for EUR/USD, you sell euros and buy the US dollar.

Whether you should opt for a short or long position depends upon market conditions and your analysis.

Now that we have discussed “How to make 500 a day trading Forex?” Let’s see if such a high aim is even practical.

Is it Realistic to Make 500 a Day Trading Forex?

If you have a large capital, then you can aim for making $500 a day trading, but if you have a small deposit amount like $100, $500, or $1000 in your account, then it does not seem realistic to aim for such high returns. So, if you want to make 500 a day with Forex trading, you should understand that either you’ll have to take greater risks than you can afford (which is not something we recommend) or you have to have a handsome deposit amount in your account.

How Much Money Can You Make from Forex Trading?

There is no exact answer to how much money you can make trading Forex, as many have made millions while others have lost it all. As everyone is different, so are their success rate and earning potential. Thus, your success in this financial market depends upon your perseverance, hunger to succeed, risk management, invested time, analytical skills, and trading strategies.

Moreover, your trade size also affects your profits, as with higher trade sizes comes the chance of higher profits. You should not forget that the bigger the amount you risk (large trade size), the higher your returns seem to be beneficial in scenarios where you have made the right trade at the right time. But it can also prove to be catastrophic for you if you have made the wrong trading move, as this way, you will lose a massive amount of money and can even blow up your account.

If you want a clear idea of whether or not your trading strategies are working for you and, most of the time, are proving to be more beneficial or catastrophic, you can read about trade expectancy and how to calculate it here.

Tips for Making $500 a Day Trading Forex

  1. You should understand the market well
  2. Have good market analysis skills
  3. Use trading indicators to speculate about trends in the market as well as to spot entry and exit points of a trade.
  4. Master risk management
  5. Control your emotions and avoid reckless trading

How to Calculate Your Forex Profits?

Measuring the pair’s movement (subtracting the opening price from the closing price) and multiplying that by the position size (obtained by multiplying lot size and the number of lots) will give you an idea about your profits or losses. Additionally, you need to deduct the amount you borrowed from this amount in case you have employed leverage.

So, for instance, if you deposited your amount in US Dollars and your EUR/USD currency pair moved up 200 pips (each pip is equal to 0.0001) and you were trading 3 lots of standard size (each with 100,000 currency units). It means that your profit will be

Profit = 0.02 x 3 x 100000 = $6,000

Conclusion

We conclude our discussion on “How to make 500 a day trading Forex” on the endnote that you should critically analyze the deposit amount in your account and then make your daily earning aims accordingly, as setting higher aims with a little deposit seems unrealistic and can put you at great risk.

All in all, making 500 a day trading Forex is possible provided that you start your trading on the right foot, have sound knowledge of the market, have a good deposit in your trading account, have a good trading strategy, and have picked up the right securities to trade at the right time. We hope that you have understood how to make 500 a day trading Forex and have learned something new to help you in your trading journey.

Have a nice day!

References

FAQs

Is it possible to make 500 a day trading Forex?

It is possible to make 500 a day trading Forex provided that you start your trading on the right foot, have sound knowledge of the market, have a good deposit in your trading account, have a good trading strategy, and have picked up the right securities to trade at the right time.
It is worth mentioning that you should make realistic daily aims for your Forex earnings and consider the amount of capital you can invest.

How do I become a day trader with $500?

Following are the key steps to follow for becoming a day trader with a $500
1. No matter how much funds you have at hand to start Forex, it will help if you always start practicing on a demo account.
2. Choose the right broker and trading platform
3. Set up a real trading account and add funds
4. Understand the market and choose the security of interest
5. Devise a trading strategy
6. Enter the market and take your position
7. Monitor the market conditions and close your position accordingly.
8. Do not forget to scale up your funds with time to survive in the market.

Which is better, margin or leverage?

On the one hand, you can improve your purchasing power with a margin account. On the other hand, utilizing leverage enables you to trade larger positions than the available funds in your account.
It is worth mentioning that there is an inverse relation between leverage and margin. Thus the lower the margin, the higher the leverage ratio, or vice versa.

How many hours do day traders work?

The majority of independent day traders work two to five hours a day, but this time can vary from trader to trader.

Can you make a living off Forex?

Whether or not you can make a living off Forex depends upon your perseverance, hunger to succeed, risk management, invested time, analytical skills, and trading strategies, as many people have made millions using Forex trading. In contrast, some have lost all and haven’t been able to even make pennies.

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