So what is a professional currency trader and how do you get to be one if you are just trading currency part time right now? This is the big question for most forex traders because just about everyone who is involved in the forex market has the dream of being able to support themselves and their families from their trading some day.

A professional currency trader could also be described as a full time forex trader but the words ‘full time’ give the impression of working 9 to 5 which is not really what it is all about. The point is to become financially free and enjoy what you do at the same time. If you continue trading consistently and successfully, you could go on to become rich.

There are two things that you need if you want to turn professional with currency trading.

1. A Simple But Profitable System

Successful traders don’t hop from one strategy to another. They develop a successful forex trading system, often by tweaking an existing system that they got from somebody else, and then they stick with it.

Usually this is a surprisingly simple system. It’s not something complex that requires insider knowledge of the financial markets or a genius mind for math. It’s the kind of system that you are probably applying right now.

The difference is that they know from experience that their system is profitable so they can apply it all of the time in a disciplined way. They trade when the signals are right and not when they are not. There may be a month when they make no money. That’s OK. They don’t panic. They know it will even out in the long term.

2. Money

It takes money to make money. The old cliche is just as true in forex trading as in any other type of investment. If you have a mini trading account with $1000 in it, you are not going to be able to turn professional tomorrow. It just is not possible to make enough money to live on from $1000 capital because that would mean turning a 300% to 500% profit a month. Get real.

What you can do, of course, is slowly build up your capital. If you can make 10% or even a conservative 5% growth per month, then you can get there in a few years. 10% growth per month, consistently for 4 years, gets you up close to the $100,000 mark where real money is made. Until that time of course you cannot withdraw any of your funds so you must have another source of income.

If your system gives you 5% growth it will take you twice as long but you are probably less likely to crash and burn in the process. However, if you start with $10,000 you can do it in half the time.

Remember to keep a low risk per trade: don’t take big risks to try to make more money. The really big traders keep their risk down to around 1% of funds or even less. When you have hundreds of thousands of dollars in your account, you want to make darn sure you don’t lose it all.

And that, in fact, is probably the biggest secret to becoming a professional currency trader: protect your capital.

There are many Forex trading systems on the market. The most frequently used is

IvyBot

When you are looking at forex systems, one of the factors that you might see mentioned in a good forex system review or summary is drawdown.

So What Is Drawdown?

All trading systems have their losses, as I am sure you know, and occasionally you will have several losses in a short period of time. The amount of loss that you might expect to have in a certain period varies according to the system, but it will follow statistical laws and is probably more than you think. The amount that you can expect to lose on each losing trade also varies with different systems, of course.

So there is a need for some kind of measure that will apply to any system to give you an idea of how much your funds are likely to diminish when a string of losses occurs. This is drawdown: the degree of loss between the peak value of your funds and the lowest point after a bad run.

Why Is It Useful?

Having a figure for the drawdown of a system is a very useful measure of the risk that you are likely to encounter. Clearly it depends on how much risk you are placing on each trade, so knowing this figure will help you keep your per trade risk within boundaries where your funds are not likely to be wiped out when things go against you. It gives you a worst case scenario based on past results.

If your actual loss goes to more than you have on deposit with your broker or the credit you have agreed with him, your broker will ask for more money (issue a margin call) or close your position. Having a drawdown figure for your system helps you to avoid this by making sure that your expected potential loss is covered.

Some caution is required here because you cannot assume that the past results are necessarily going to continue into the future. You should plan for a buffer, probably at least as much again. 

Drawdown is also used in calculating the Calmar ratio of a financial trading system. This the compounded annual return divided by the maximum drawdown of a system. Often, a system with high returns will also have high risk, but you can use the Calmar ratio to compare different forex systems. One with a higher Calmar ratio will have a higher return in relation to its risk and most people would consider that makes it a better system, at least on historical results.

How To Calculate Drawdown

Of course, many systems are described or sold without telling you the drawdown. Or you may be designing your own system and want to be able to assess its risk. You may wonder what to do in this situation. The answer is very simple. If the system does not tell you exactly what its drawdown is, you should try to work this out for yourself. The best way to do it is to run the system for a considerable period in a demo account. This is always a wise plan when testing a new system anyway.

As you probably know, demo accounts allow you to run a forex trading system in real time but with virtual funds so that you do not have to risk any of your own real money. Most brokers provide them and it is best to have a different demo account for each system that you are testing. This makes it easier to track results and variables such as the drawdown of your forex systems.

FXYard -  most frequently used demo account

IvyBot -  the latest Forex Trading robot – is a very sophisticated Forex trading system.

International currency exchange or forex (foreign exchange) trading has become one of the most popular ways for investors to get involved in speculative trading from home. Instead of trading stocks, you simply trade the different currencies of the world.

When a currency that you bought increases in value, you make money. However, unlike  stocks, you can also make money when a currency that you sold goes down in price. So you could say that you have twice the opportunities for a trade.

The forex market is huge and because of its global nature, you can trade at any time of day, 24 hours a day from Monday through Friday. The US dollar is the most frequently traded currency but of course, two currencies are involved in any exchange. The other major players are the euro, the Japanese yen, the British pound, the Australian dollar, the Swiss franc and the Canadian dollar.

You can start forex trading from home provided that you have a computer with a high speed internet connection and some funds to invest. There are many different types of forex trading brokers and some will let you open an account with just a few dollars now.

You can trade on margin so that with an opening balance of say $100 you could be controlling trades of $10,000. This is what makes forex trading attractive to many investors, because it means that you can make a lot of money from just a small starting fund. However, it also means that the risks are high and you should be prepared to lose this money if things go wrong.

Of course it helps if you have some practical experience in a risk free trading situation so that you can be confident about your ability to trade successfully before you start. This is easily done through a forex demo account or practice account which most brokers will offer you for free. Their aim is to have you try out their service without obligation. You can be testing a system at the same time, to make sure that it works for you before you switch to real money.

There are many forex systems available for the international currency exchange market. You will easily find free systems online, but you may be suspicious of these, since often in this world we get what we pay for. The quality may not be high and there is no point starting out with a system that will lose you money. It is better to pay a few dollars for something that is profitable. A good way to evaluate the different systems is to look at reviews online, especially in forex trading forums.

Brokers will also offer you a wide range of tools to help you implement your chosen system. These include charts and indicators that will help you to assess whether the price of a currency pair is likely to rise or fall in the short, medium or long term. Often they will also provide financial news alerts which can assist you. It is very useful to know if a national government is about to make a financial or economic announcement which will have an impact on the international currency exchange markets.

The introduction of IvyBot – commercially available automated forex trading system programs is one of the reasons why forex or foreign exchange trading has become more and more popular over the last few years. The idea of making money on autopilot appeals to just about everybody.

Add to this the fact that brokers are now allowing new traders to start with just a few hundred dollars in an account, and just about everyone has the necessary home computer and broadband connection these days, and it is easy to see why forex trading is attracting a growing number of home traders.

For someone new to the world of forex trading, there are two main issues that you must address if you want to make money with forex autopilot software. First, you must understand that the robot does not come with any guarantee that you will make money. The only guarantee the retailers will ever give you would be a refund on the price you paid for the software. Currency trading is a risky business and even with a robot, you could still lose money, either because the market is going through a patch where its system does not work or because you committed more of your funds than you should to one trade.

The second issue is that they can take a while to set up. Sure they work on autopilot once you have them connected, but they do not come and install themselves on your computer. You have to download them, install the platform that they run on, install the program itself and link everything up. Of course you get the instructions which are usually clear, and you can also contact support if you need to. But setting up the robots can take a little time and some people do not have the patience to see it through.

So you need to be prepared to spend a little time on getting them set up correctly. You also need to think about money management and take this seriously. The system will not work if you are constantly tweaking your settings. The best thing is to use a demo account (which usually comes free of charge) until you are familiar with everything and making consistent profits.

Forex robots certainly have some advantages over the human trader. They can monitor the currency markets 24 hours a day, and since the currency markets are active 24 hours a day this is a big bonus. Also, they are perfectly disciplined. They will never close a trade early because they got scared, or hang on to a trade when they should have exited because they were hoping for a few more dollars.

So provided you take account of the above points and have the patience to set up your robot correctly and test it, you could find that running an automated forex trading system on your home computer brings enormous benefits.

There are many Forex robots on the market. The most frequently used is

IvyBot Robot