Historically, forex trading was a primary income source for experienced or institutional investors, and one that remained beyond the reach of mos
Historically, forex trading was a primary income source for experienced or institutional investors, and one that remained beyond the reach of most part-time or aspiring traders.
However, this landscape has changed during the digital age, particularly in the wake of the coronavirus. More specifically, we’ve seen a large number of part-time and younger traders hit the market through 2020, many of which have taken out large holdings in risky assets like currency and crypto assets.
But what exactly is forex trading, and how can this endeavour actively help to improve your life?
What is Forex Trading?
In simple terms, forex trading refers to the buying and selling of international currencies, with these assets often traded in pairs and as derivative entities.
This means that investors can speculate on price movements and profit without assuming ownership of the underlying financial instruments, allowing far greater flexibility and empowering lucrative trading strategies such as scalping.
Interestingly, forex is also a highly leveraged market, which means that you can control disproportionately large positions with a small deposit.
Most reputable brokers will offer leverage of up to 100:1, so it’s possible to pursue significant returns with just a few hundred pounds.
Of course, it’s also possible to lose considerably more than your initial deposit, but it cannot be denied that the leveraged nature of forex makes the broader concept of investment much more accessible to part-time traders.
Another key benefit of the forex market is the sheer diversity of assets available. Major currency pairs are the most popular, with just seven such entities accounting for 68% of all daily forex trades.
Of these, the EUR/USD pairing accounts for a whopping 24% of all activity, with this highly liquid asset easy to buy and sell and an excellent starting point for brand new currency investors.
Can Forex Trading Improve Your Life?
Despite all of these benefits, it’s estimated that between 70% and 80% of forex traders lose money on average. This highlights the challenging nature of forex trading, while suggesting that the practice may not always improve your life or finances.
However, this alone doesn’t negate the numerous advantages of forex trading, especially in an economic climate where households are keen to secure additional and flexible sources of income.
Similarly, there are ways that you can safeguard yourself and your capital as a newbie forex trader, such as starting out with a small amount of capital and scaling this over time and in line with profitability.
We’d also recommend minimising the precise amount of leverage that you take on board as a novice investor, at least until your strategy has begun to deliver results and you can be confident in controlling larger currency positions.
By following these steps and managing your expectations by initially engaging in trading as a side hustle, you can lay the foundations for long-term success and build experience in a way that boosts your profitability.
illinoisnewstoday.com