Flip, eat, sleep, repeat – such is the degen lifestyle of a forex trader. While majority of people are still debating about on-site jobs, hybrid work or full remote opportunities, degens traders are thriving on market volatility in attempt to tenfold or even hundredfold their small capital, living the dream lifestyle of many.
Or at least that is how social media portray them to be living.
Half the time, these market enthusiasts are glued to their computer screens and following the latest market movements for the next big opportunity.
Even the S&P500 companies would be out of manpower if and only if everyone could easily be a successful forex trader. No one would be interested in a “job” if it is straightforward to achieve such a degen lifestyle.
While social media seems to display that life is great as a trader, the truth is that such lifestyle that demands one to possess dedication in learning and a high-risk tolerance to market fluctuation.
Without any consistent or stable income stream at the onstart, a degen forex trader typically has a super small capital and often has the wildest dream of flipping $100 to his first million. While this is not impossible given that there are endless opportunities in the financial market, traders are often subject to certain challenges that would make or break them.
If a market always stays quiet and flat, there would be no opportunities to for profits to be made. On another end, extreme volatility or swings would either result in a huge fat profit or wipe a trader’s account out.
It can be tricky for a newbie to figure out on the right balance to strike, and in this case may benefit from following a signal provider using the copytrading feature.
Staying up to date in the financial markets is a constant battle. On top of economy calendars, fundamental data, technical analysis and news articles, degen forex traders also tend to receive tips from social media channels such as Twitter.
Not only it is easy to drown in a sea of information, but traders may also struggle to filter or verify the validity of the same. It is no surprise to see some traders would rather just purely rely on technical analysis as their trading strategy instead of trading on news.
Many degen traders are prone to take on excessive risk as they all hope to make money quickly. As such, they often trade in a speculative manner, and further amplify the risk using high leverage.
Let’s use a trade in gold (XAUUSD) as example.
If a trader with a balance of $4,120 decided to short one (1) standard lot of XAUUSD at $2,060 with target price of $2,000, he is using a leverage of 1:50. If things moved according to his plan, he would make a profit of $6,000 on this trade alone. That is a whooping 145.63% on his capital of $4,120 – which is impressive!
However, XAUUSD eventually rallied in the opposite direction, past the $2,100 price level. If the same trader set a stop-loss at $2,080, his position would have been closed with a loss of $2,000, which is quite a painful loss of 48.54%.
Now imagine how can he recover such a sum back? Only if he doubles the trades that he subsequently makes with his new balance of $2,080. Ouch.
Pictured: Financial hell
Worse, if no stop-loss was set at all, his entire account would have been wiped out once XAUUSD moves past $2,101.20. This is exactly how over-leveraging kills a forex trading account.
P/S: You can also check out how to trade gold (XAUUSD) if this is your choice of asset to trade.
By setting a stop-loss too far away, not adhering to a stop-loss or not using a stop-loss at all, a forex trader is throwing risk management out of the window. However, managing risk is crucial for survival as a degen trader, as one will need to survive through series of trades before striking a big successful transaction.
In the meantime, one single mismanaged trade can wipe out an entire portfolio, sending all previously made profits back into the market. This is why it is essential to strike a balance between risk and rewards.
No doubt the market is a place full of high risks and speculation. Although a retail forex trader cannot control the market, what he can control is his own risk management and mental state in avoiding impulsive or reckless decisions.
With strong commitment in learning the markets and good discipline in managing risks, a forex trader will be able to achieve consistency in his trades. From there, the profits piled over time will generate a significant sum, leading to financial freedom envisioned by most.
Embark on your journey as a forex trader with VT Markets now. With 1000+ assets being offered, ECN and STP accounts, forex economy calendar, academy and analysis being made avail to you, there is nothing to stop you from living the lifestyle you desire. As a new client of VT Market, you can also claim welcome bonus on your deposits. So, hesitate no more, start today!
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