Can you make money with Forex trading? If you don’t know by now, Forex trading is a massive financial market in the world wherein more than $6 trillion of income is recorded day by day.
Having said that, it is safe to assume that the Forex trading market offers an unparalleled and highly profitable chance for traders and investors all over the world. Additionally, currency trading has been proven to be a lucrative source of income for lucky investors.
In the past, only a select few can make money with Forex because of limited accessibility. Fortunately for us, this huge money making market can be experienced by investors and traders of different levels of expertise as it is now open to everyone through varying online trading platforms.
So to answer our question “can you make money with Forex trading?” We will cover the basics such as discussing what the Forex market is, what you need to do to start online Forex currency trading, and more. Are you ready to learn with me?
Table of Contents
Defining the Forex Market
The forex is an extended worldwide interconnection of brokers, investors, financial companies, investment corporations, and banks that buy, sell, and trade currency.
The transactions involve the exchange of money that permit buying of goods overseas, hedge funds with billions of foreign money, and individual entrepreneurs who are knowledgeable and brave enough to play in this risky marketplace.
In other words, it is not a centralized currency exchange like most people think.
Forex trading is open 24 hours every day all throughout the business week. The reason is that currency trading is done by different individuals all over the world in varying time zones.
In the olden days, only governments and large companies could make money with Forex. But now, those who can finance, have a computer, and access to decent internet connection can take part in currency trading.
How Do I Get Started?
If you want to try online Forex currency trading, make sure that you are off to a good start. It is exhilarating and thrilling to make money with Forex, and it sounds like it’s a pretty easy way to earn money. But the truth is that it is very risky. The word “risky” should be actually repeated many times.
As I have mentioned earlier, the majority of the investors acquire huge debts and lost a lot of money trading currency.
My friendly advice? If you are really interested in trading, then learn as much as you can and practice so that you can make money with Forex. Hang tight because it will require patience as well. Otherwise, you will lose more money than when you started.
I personally consider myself lucky that I survived trading currencies without getting into debt. I have met Wealthy Affiliate and learned how to make money online with affiliate marketing. So, I can make money online now, without all the risks that come with trading currencies. On the other hand, sometimes I miss trading.
If you want to avoid losing more money than you gain, you will need to study. This is the best technique to make money with forex while avoiding huge loses. You will need to learn the basic terminologies such as pip, base currency, quote currency, and more.
Below are some of the terms that you will frequently come across:
- Base currency – the currency against the other currency is quoted. So, in this example: EUR/USD, the EUR is the base currency. The base currency is the first one in the pair.
- Quote currency – the second one in the pair. So, in the example above, the USD is a quote currency.
- Bid price – the price your broker would be willing to buy or bid your base currency.
- Ask price – the cost of your selected quote currency. Remember that the bid price is always lower than the ask price.
- Spread – the broker’s commission, or the difference between the bid and ask price.
- Pip – stands for Point in Percentage. According to Investopedia, it is a standardized unit and is the smallest amount by which a currency quote can change.
You can now read more Forex books, take online courses, or enter online trading groups once you know the common terms used. Don’t think that Forex books are uninteresting and intimidating. You will be surprised to find books that are actually easy to understand and entertaining.
Additionally, you will have to find out which agencies monitor and regulate the Forex market, which brokers to choose, why low spreads can help save money, why you should avoid sniping, and more.
Don’t know how or where to start? There are tons of resources online to help you learn how you can make money with Forex. We highly recommend the following sites, tools and courses as they can offer you with free and paid high-value data when it comes to online Forex currency trading:
- Forex Trading Crash Course (Forex course for beginners)
- Forex Trendy (Forex trend scanner)
- Forex Signals
How Do I Find the Best Broker For Me?
You can’t trade in the Forex market if you don’t have a broker. But believe me, choosing one broker out of the many is challenging. You will need someone who is trustworthy and will provide you with the best chance at succeeding in trading.
To find this trader, you need to follow the recommendations of Investopedia. Here they are:
Find brokers with a low spread. As mentioned earlier, spread is the difference between the bid price and ask price, and this is how the brokers earn money. The spreads vary from broker to broker.
The brokers are connected to big banks and financial organizations. You will want to get a broker who is endorsed or favored by credible financial institutions. If you found one backed by an institution, make sure to look for the following credentials: (1) registered with Futures Commission Merchant, and (2) monitored by the Commodity Futures Trading Commission.
Conduct a background check on your broker. What do people say about him? Are majority of the comments about him negative or positive? The reason is that your broker shares the risks of investing with you. Pick a broker that is known to have fewer interventions.
Not all trading platforms are the same. Your broker will provide you with a platform that comes with tools such as charts, feeds, and so much more to aid you make the best investment decision there is. Explore the platform suggested by your would-be broker prior to creating an account with them.
What Strategies You Need to Learn to Succeed?
Yes, there are strategies and you need to do your research about them. After which, you will need to select one to master and perfect. The strategy hinges on an analysis methodology. Here are two that you can choose from:
- Fundamental analysis – this predicts the long-term movement and course of currencies and economies. The analysis looks at and analyzes payroll trends, retail sales, purchase trends, and more. This is for traders who want to keep their currencies for a longer period.
- Technical analysis – this is for those who want to buy and sell fast and frequently basing on even the smallest movement in the Forex market. This analysis focuses on predicting the behavior of currency by looking at pricing and trading trends. If a trend is recurring over and over, traders will deduct that this particular trend will happen again.
Research before picking a strategy and base your decision on how much risk you can make, time and money you can invest, and whether you want short or long-term profit.
After reading all this, I can only assume that you are aware of the challenges to hurdle to make money with Forex. But if you decide to try, you will need to practice.
I suggest requesting a demo trading account with your broker so that you get to experiment with the strategies, and try out several trading platforms before picking one.
The demo accounts contain as much as $100,000 of “funds” (that are not real, by the way) that you can use however you want to. This account can help you practice a strategy that you are considering as you decide on a platform for your needs.
Again, I cannot stress enough how difficult and risky online Forex currency trading is. You need to have ample funds to get started and the readiness to accept losses.
You should also be ready to invest a lot of time to learn and trade, and the discipline to push through with your chosen strategy even if things don’t go as planned. Courage is also a needed characteristic so that you don’t lose hope as your balance rises and falls.
But if you practice and learn as much as you can, you can make money with Forex. Good luck. You will need that.
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