It’s estimated that between 70% and 90% of all forex traders lose money on a regular basis, with this causing many to believe that international currency trading is an ineffective way of generating income.
However, profitable traders are able to utilize leverage to bank sizable returns, while technological advancement and the rise of interactive trading platforms on Oanda also enable you to invest in your spare time and bank forex profits as a secondary income.
But can you really trade your way to a better and more financially secure life? Here are some of the key considerations to keep in mind.
Accessing the Forex Market
Aside from the innate fear of losing money, aspiring forex traders are often deterred from investing by a belief that they’ll need huge sums of money to open an account and execute orders.
However, this ignores the fact that the forex market is highly leveraged, which means that you can open disproportionately large and potentially lucrative positions with a relatively small deposit.
With most reputable brokers offering leverage of up to 100:1 to new traders, you can theoretically control significant forex positions with a hundred pounds or less, making the market far more accessible than you may have initially thought.
Investing an Amount That You Can Afford to Lose
This leads us neatly onto the topic of budgeting, as while you can trade forex with relatively small cash deposits, you’ll still need to ensure that you’re only ever investing amounts of capital that you can afford to lose.
To achieve this, you’ll need to invest time in creating an accurate budget, which details your incomings and outgoings over the course of a typical week or month.
This should enable you to determine precisely how much disposable income you have during the budgeting period, creating a scenario where you can safely commit this cash to the market rather than frittering it on other and less meaningful expenses.
Of course, you can look to scale your efforts and investments over time, especially as you gain more experience in the market and begin to bank profits and increase your disposable income.
Trade in a Way That Suits Your Lifestyle
On a final note, it’s also crucial that you create a trading style and schedule that suits your wider lifestyle.
For example, part-time traders should try to ensure that their activity doesn’t interfere too much with their private lives and existing job roles, with mobile apps such as the MetaTrader 4 enabling investors to operate while on the move.
By utilizing similar mobile and desktop platforms, you can optimize the efficiency of your trades and increase your chances of achieving success over time.
You should also create a set-up that suits your forex trading strategy, whether you’re a scalper who executes numerous orders each day or a position trader who looks to generate longer-term profits.