Updated: Aug 31
Working from home and earning a decent amount of money is a dream for many around the world who want to depart from the 9-5 rat race. People get tired of the stressful working environment, notorious bosses, poor salary, and being away from their loved ones. Some even work overseas to provide for their family. Every day thousands search the internet, seek professional advice, or attend specific seminars or trainings on how this could be achieved.
You may also want to read my article on 'What Owning a Business Could Do To Your Life'.
Forex trading may be known to many, but likewise, a big number of people doesn't know what it is, or they may have negative concept about it. Some say that it is pure gambling. For me, I would say it's NOT GAMBLING, as long as you manage your risks. Just like any other businesses, forex trading has its own risks so it would be wise to learn as much as you can, as you would prepare for any other business venture. This is also not a get-rich-quick way to increase your cash flow. It takes knowledge, patience, and a lot of practice to be a successful forex trader. Once mastered, CONGRATULATIONS, you have just built a recession-proof home-based business. With this kind of business, you can build a fortune and not be affected by any ailing economy because in forex, you can make a living whether the global economy is doing well or not; and the best part of it is that you can earn a living wherever you are in this planet! As long as you have your computer and a decent internet connection, you're good to go. Oh, wait and did I mention fortune? Yes! You can make millions of dollars once you have mastered a strategy, maintain your risks, and manage your emotions as you trade. Fear and greed are not entertained in this kind of business. You must remain objective. Plan and act according to it. That's the psychology part of this business. I have known some Filipino forex traders who made millions of dollars doing this. If others can, maybe it's also worth your try.
So, what is Forex? The word "forex" is the contraction (portmanteau) of the words foreign currency and exhange. When you engage in forex, it means you are exchanging one currency into another, such as the Euro into the US dollar. This is quoted as EUR/USD in the trading platform. Forex occurs in commerce, trading, or tourism. For an instance, when you travel to Japan and you came from the United States of America (USA), you may have to go to a local money changer and exchange your US dollar (USD) into Yen (JPY), the local currency of Japan. This is forex as applied to tourism.
The most popular currencies which are traded in the forex market include the Australian dollar (AUD), the Canadian dollar (CAD), the Swiss franc (CHF), the euro (EUR), the British pound (GBP), the Japanese yen (JPY), the New Zealand dollar (NZD), and the US dollar (USD). These are the most volatile currencies, which means you have more opportunities to trade and to make money out of them. We trade in pairs, such as AUD/USD; EUR/USD; USD/CAD; GBP/NZD; etc.
In trading, we basically buy when the price is low then sell high when the price goes up to make a profit. In forex, you can earn when the market trend condition is good or bad, that is when the market price is either going up or down. For example, you may want to trade the US dollar against the Canadian dollar (USD/CAD). If after studying the chart and other factors, you think that there is a probability that the USD will eventually become weaker against the CAD, you will be selling USD and buying CAD. Vice versa, if you think the probability is that the USD will eventually become stronger than the CAD, you will be buying USD and selling CAD. Remember, we trade in pairs in forex. Take a look at the following USDCAD hourly chart from my MT4 platform. This will give you an idea of how your trading screen will look like.
Your next question maybe, "How much can I earn from forex trading?" Okay, let us say you invested $1,000. A good risk management rule is you only risk 2% of your account. You only risk $20 dollars per trade, and with your $1,000 you only buy 10,000 units of the currency you want to buy or sell and put a protective stop loss of 20 pips. The stop loss prevents you from losing more than 2% of your account ($20) when the price falls instead of going up; remember nobody can precisely predict where the market will go. We deal with probabilities in this type of business. Not gambling though. If the market price goes up, as you have predicted, every pip movement of the price from your 10,000 units costs around $1. If the USDCAD price moves from 1.3250 to 1.3275, that's 25 pips and you made your $25. Many forex brokers allow you to invest as small as $100.
Now, let us say, you invested $10,000. Considering proper risk management, you can buy 100,000 units and each pip price movement costs $10. So, a 25 pips movement can give you $250. Traders take different kinds of risks management, others are aggressive and some are conservative. Whatever risk you take, make sure you're not gambling.
Whoa! If this is the first time you have read about forex, these basics may already be overwhelming. But don't worry, take your time to learn. There are tons of resources out there to help you begin forex trading. As a beginner, you can try the following websites:
There are also lots of free youtube forex tutorials.
Trading in a demo account is also a must before you go live trading. Through this, you won't risk any hard-earned money as you get to feel the market. Most forex brokers offer free demo account. Some of the most popular forex brokers are Oanda, FXCM, and IC Markets.
So there you go, there is no harm in trying. Do not gamble in forex trading and the market might reward you with a fortune which will change your life. To financial freedom, cheers!
Subscribe to Thousand Business : Where Minds Meet Success to be updated with our latest articles.
Like this article? Share it! Click, copy and paste the link below to your favorite social media network.