How to make money trading on forex as a part-time trader
There aren’t that many ways to make additional money when you are already working 9-to-5. Most importantly, because you don’t have any time for them. Of course, there is the fabled passive income but it demands a huge starting investment and is sometimes just unrealistic.
Forex is a market where major banks and international corporations exchange currencies to supply their trading operations. Since its establishment in the 1970s, Forex became one of the world’s largest exchanges, with a daily turnover of 8 trillion USD.
Prices on Forex change pretty fast and have a very healthy range. This allows for very neat speculation opportunities and makes trading very profitable. As long as you know what you are doing — you will walk away with 20% profits each week. That's right — for every 5 USD you invest, you will get 6 USD back!
Of course, there is a significant amount of risk involved too. And in order to mitigate that risk, you need to know how to trade on Forex.
How to Trade Safely on Forex
Private traders can trade on Forex directly, but it costs upwards of 6 000 USD/month to just maintain a trading account. Most traders prefer using a broker instead, which allows to minimise the cost and split the expenses with thousands of other traders.
How to Pick a Broker
Forex brokers are people who trade on your behalf, so it’s important to pick a broker you can trust. Therefore, there are quite a lot of factors that are important.
- Age. A lot of young brokers face growing pains when they are struggling to scale with large numbers of traders. This can cause slip-ups and missed opportunities and generally, should be avoided. Once the broker has been active for 5 years or more, you can be confident that they can handle their job.
- Regulatory Compliance. A Forex broker needs to be registered with different government regulators, and you can tell a lot about the broker by seeing the regulators they comply with. Financial Service Authority (or FSA) is one of the stricter regulators in Europe and is considered a good option.
One of the best brokers is JustForex — an international broker with good reviews that has been operating on the market since 2010. They have remarkable support and, quite often, provide special offers for the new and returning traders.
How to Study Forex
Before you even make your first deal, you will need to understand what you are getting into. For example, you need to know what different Forex terms mean — for example. support, resistance, moving averages, margin, etc. There are quite a lot of guides online on brokers’ websites.
How to Pick a Trading Strategy
A trading strategy is a set of trading rules that you should follow. It specifies the most profitable trading conditions and encourages you to trade only while they are available. Having a trading strategy allows you to stay calm and not to chase profits blindly, which often ends in a disaster.
There are many strategies available online, but most of them are more suited for full-time traders. As a part-time trader, you won’t be able to use micromovements, which are among the most lucrative trading opportunities.
However, there are trading strategies that utilize major market movements as a main source of profit — for example, Price Action was designed to work with 4H timeframes. This means, that as long as you log in once per 4H to check on the state of things — you are golden.
How to Practice Forex Trading
The best way to learn is with a Demo account — a special account that has only virtual money on it. You can select any amount of money to be added to your demo account for free but you won’t be able to withdraw any of it. Instead, it is used to practice trading and learn more about Forex in a safe environment.
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