If you’re already sitting on a decent chunk of capital, trading forex is a great way to make money from the comfort of your home (or anywhere else as long as there is an internet connection). With this in mind, keep on reading as we’re about to answer the most common questions that will help you get a rough overview of the industry.
What is forex trading?
Forex trading (also known as FX or foreign exchange) is the act of trading one foreign currency against another. It’s one of the most liquid asset markets in the world. Profits are made based on speculation and educated guesses on how a certain currency will perform against another. This is influenced by several factors, including the country’s economy, news and events, etc.
How steep is the learning curve?
This depends on your current level of knowledge. But as long as you consider yourself somewhat computer literate, the learning period could take anywhere from a couple of months to a couple of years.
You’ll need to study up on the basic terms (see the section at the bottom) and perhaps invest a little bit into your education. Once you’re ready to enter the market, be prepared to spend some time every day to see how your trades are going. Remember that you don’t need to win them all to stay profitable – only the majority!
How much can you expect to make?
For obvious reasons, this depends on the amount of capital invested. But the great news is that even an average trader makes enough to sustain a comfortable living, with the average annual salary being around $80,000.
At the end of the day, your capital, skills, and education will play a key role in determining your overall earnings. Never rush in without the slightest idea of what you’re getting yourself into as this is a surefire way to losing money.
What is the correct strategy?
While it’s impossible to cover every aspect of profitable forex trading, below you’ll find the most important points to keep in mind.
First of all, always trade with an edge. This will skyrocket your chances of making a winning trade. The trick is to look at the moving averages across different periods such as the 10-period, 50-period, and 100-period. You can learn all about it in a support and resistance levels course, but the gist of it is making your moves based on the market averages measured over a longer period of time to increase the degree of certainty.
No matter how well versed in the art of Forex trading, no one is capable of trading with a 100% accuracy, so it’s also important to minimize the impact of a loss. So manage your resources wisely and never put yourself in a position where making the wrong trade will wipe out your entire bankroll. In other words, think in terms of risk/reward rather than fear or greed.
Last but not least, don’t fall into the trap of thinking that your setup needs to have at least 5 monitors, a dedicated computer, and several momentum indicators. A professional trader’s office doesn’t look that much different from the one you’re sitting in right now. As long as you stick to your ABC’s of Forex trading and don’t deviate from your core strategy, you should do well.
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