When you’re supporting a family relying on the income from your regular 9 to 5 job may not cut it at times. Whether you need a side income to pay for essentials or so that you and your family can enjoy some nice little luxuries – one of the best ways to get one going is by starting to trade on the forex market.
What is Forex Trading?
Essentially trading forex pairs involves buying a particular currency and then selling it when the price is higher. Based on how much the price increased and how much you bought, you’ll then make a profit.
For example, if you were to buy Euros using US dollars when 1 Euro was US$1.10 and it subsequently increased so that 1 Euro was US$1.11, then for every Euro you initially bought you’d make $0.01.
While that may not seem like a lot it adds up – which is why forex traders often deal in large sums of money so that small increases in the price can provide them with tangible (and often lucrative) profits. Seeing as price fluctuations on the forex market are normally miniscule (i.e. $0.0001, or ‘1 pip’), trading with large capital is a necessity to make a good profit.
How to Get Started
In order to get started, you’ll need to have a platform on which you can place trades for yourself. One of the best places to start is by heading over to www.etxcapital.co.uk and checking out their platform.
Once you sign up on that platform, you’ll be able to trade not only on the forex market but also in equities, indices, commodities and other financial derivatives. For now seeing as you’re solely interested in forex you can focus on that and use the resources available to learn more about the market, currency pairs, and factors that affect their price.
To Leverage or Not
As mentioned previously, to make a profit from forex you need to be dealing in large sums so that even an appreciation of 10 pips (i.e. $0.001) can provide you with a healthy profit. Needless to say you may not have that kind of capital, which is why ‘leveraging’ can help out.
By ‘leveraging’ your capital, you will essentially be able to make bigger trades. If you start with a capital of $100 but leverage it at 200:1 then you’ll be trading with $20,000 instead. Of course that will also mean that small fluctuations that go against you could result in you losing your $100 that much quicker, but that is part of the risk of trading to begin with.
Whether or not you choose to leverage your capital or not is up to you – but it is one way to get started quickly and build up a reliable side income on forex.
Learn More About the Market
The key to being successful when trading on the forex market is having a thorough knowledge of it. At first you will want to focus on the factors that influence the market, and start to examine certain ‘events’ that play a crucial role in the performance of particular currencies.
While some of the events that affect the forex market may be unpredictable – others are often scheduled. For example, economic data releases are often announced months in advance or released at particular points throughout the year – and so predicting how a currency will respond to that release may be one way to make a good profit.
Start Using Stop-Loss Orders
Before you actually start to trade, it would be a good idea to also learn about stop-loss orders. In simple terms these orders are used so that if a currency drops in price to a certain level the platform you use will automatically sell it off – to prevent further losses being incurred.
In a nutshell it is a form of ‘protection’ so that you don’t end up losing too much. While there is often the temptation to ‘hang on’ to a currency that is losing value in the hope that it will go back up that almost never happens, which is why stop-loss orders could really help you to avoid losing a significant chunk of your capital. All experienced traders use stop-loss orders, and you should certainly do the same when you trade on the forex market.
Make no mistake forex does come with its fair share of risk and there are no ‘guarantees’. However if you’re willing to learn and minimize your risk, you could really make quite a nice profit from it. In time you may even find that the forex market is so lucrative that it can replace your main income, and provide both you and your family with a ticket to financial freedom and a much more relaxed and easy life.