Apart from planning how to generate money in forex trading, it's also important to plan how you withdraw those profits. Learn how to build a withdrawal strategy in this article.
Most traders know perfectly well that forex trading is no simple job. Due to the relatively huge effort and time invested in the trades, it's only natural that at some point there comes a time when traders wish to enjoy the money they've earned. The urge to take the profit typically increases once the balance reaches a certain point or after a series of profitable trades. Now in order to get your hands on the hard-earned money, you need to withdraw it from your account.
What's important to understand is that withdrawing money actually comes with several considerations. Although the withdrawal process is generally the same in most brokers, there are certain things that are different from one broker to another, such as payment methods, fees, or limits.
This is why it's not exactly wise to withdraw randomly. Instead, there are withdrawal planning strategies that you might want to check out in order to get the best condition.
- Checking for Withdrawal Issues
- What Can You Get from a Withdrawal Plan
- Making a Withdrawal Plan
- How to Withdraw from Forex Brokers
- Final Notes
Checking for Withdrawal Issues
First and foremost, you need to make sure that your forex broker has no withdrawal issues. Many people managed to make a fortune from forex trading, but not all of them were able to easily take and use the money they've earned due to withdrawal issues with the broker.
Unfortunately, in the forex market, it is not uncommon to find brokers that like to complicate withdrawal processes. Some of them even reject withdrawal requests for unknown reasons. It's worth noting that such behavior may not always indicate that the broker is a scam, but it shows that they are not reliable.
With that being said, it's highly necessary to choose a trusted forex broker. It's even better to only trade with top-regulated brokers because if you encounter any withdrawal issue with the broker, then at least you will be able to rely on the authority to take action against the company. Apart from that, always check the specific fees, rules, and possible delays. It's a concern if the broker asks to wait a week or more for withdrawal.
What Can You Get from a Withdrawal Plan
Once you're sure that the broker is legit and has no withdrawal issues, it's time to think about how and when you are going to withdraw. This is called a withdrawal plan and it's totally necessary to keep your money management on the right track. But before we learn how to make one, let's see some of the benefits that you can gain from it.
1. It Motivates You
Motivation is perhaps the most obvious reason why you need a withdrawal plan. If you plan your withdrawal beforehand, then you know exactly when you are going to get the money and probably spend it in your day-to-day life. If you set a specific goal before allowing yourself to withdraw, you will be encouraged to stay focused and reach that goal.
Not only that but setting a goal will also help you from becoming overconfident with your trades. Oftentimes, traders get a winning streak and feel that they've "beaten the market". After that, they would become overconfident and increase their position size rather drastically. Instead of gaining bigger profits, such reckless behavior tends to result in devastating losses. Therefore, it's great to withdraw once in a while to let you enjoy the profit and help you stay focused.
2. It Helps You See the Bigger Picture
Having a withdrawal plan would help make your trade more organized. It basically provides a framework for your trading. You can see your trading journey from a bigger perspective and perhaps see the purpose of it. It would remind you of the goal that you've set, not just trading for the sake of trading.
3. It Helps You Put Losses into Proportion
Still related to the previous reason, a withdrawal plan helps you understand that losing trade is not the end of the world. Instead, losing trades is a part of your trading journey. Forex trading isn't some game where you'd be able to dodge all of the pitfalls and come out with profit every single time once you master it. The truth is that every forex trader wins some and loses some, so getting losses here and there actually takes you closer to the bigger goal that you have in mind.
Making a Withdrawal Plan
When it comes to choosing the actual strategy to choose, you need to remember that just like any other aspect in forex trading, there is no ultimate strategy that's perfect for any condition or suitable for anyone. Thus, you should arrange your strategy based on your personal preference and trading style. Here are some ideas to start with:
See Also: Forex Brokers with Instant Withdrawals
1. Withdraw after Reaching a Certain Percentage or Profit
You can choose to withdraw once you reach a certain amount of profit, so you basically set a specific target that you must achieve before allowing yourself to withdraw.
Essentially, you can set the target whatever you want. However, it's important to pick a realistic number that you can achieve in a considerable time. If you set a target that's way too ambitious, you might take a very long time to achieve it and end up not withdrawing at all since you haven't reached the goal. In contrast, if you set the goal too low, then it would be too easy for you to achieve it. You'll end up withdrawing too often and multiply the withdrawal fees.
Typically, people define long-term sustainable forex trading if their returns are better than benchmark indices, especially in bearish markets. You can check how the market is going and how much indices gain on average. Setting your goal around this number may be a great idea.
2. Withdraw after Reaching a Certain Account Size
This strategy is generally the same as the previous one, but instead of profit, you focus on your account's balance. So once it reaches a certain number, you can start the withdrawal process. The benefit is that this can prevent your account from growing too much. This is also related to your mental stability and how you can control your confidence while trading.
3. Withdraw Every Once in a While (Weekly/Monthly)
This is another option that's pretty popular among traders, especially those who use forex trading as their main income. The target is to make consistent profits so that you have enough money to withdraw by the end of each week or month. You can decide the period (weekly, monthly, and so on) depending on your needs and how much you usually gain. The drawback is that perhaps the withdrawal amount may not be the same in every period, so it can be higher or lower than the previous transaction depending on how much you earn during that time.
How to Withdraw from Forex Brokers
The actual withdrawal process is different in each forex broker, but usually, the process follows a general procedure, which is pretty straightforward and doesn't take longer than a few days top.
The first thing that you need to do is link your banking account with your trading account. In this case, most traders already link their bank accounts when they make their first deposit, but in case you want to send your money to a different address, you need to do this step first.
Afterward, you need to log in to your account and locate the withdrawal option on your broker's website. Usually, the broker would require you to fill a withdrawal form to request a withdrawal.
Input the required information in the withdrawal form, such as what withdrawal method you're going to use, how much you're going to withdraw, and in some brokers, a short description or reason. Once you complete the form, submit it. The last step would be to wait for the request to be checked and approved by the broker.
Some traders prefer to withdraw their profits on a regular basis while others prefer to build their trading account before withdrawing. Think of it as an income made from forex trading. In other cases, it's also possible to build your account and only withdraw a certain percentage of the profit because the rest is going to be used for bigger position trades in the future.
There's no right or wrong when it comes to choosing a withdrawal strategy. It depends on each trader's goal and how they decide to manage their money. The point is that it's important to have a withdrawal plan. It's going to help you stay motivated and deal with trading losses better when they do happen.