If you are looking for a way to earn some extra cash or looking for a more flexible way to earn a living, you may have considered trading either in currencies or in equities (stocks and shares). When it comes to trading, most people immediately think of the stock market but there are a number of advantages to trading in currencies.
One of the first trading advantage of the forex market is the fact that it is open 24 hours a day. Unlike the equities and commodities markets which all have a closed period, you can trade around the clock. This is a great advantage if you are doing some trading around your 9-5 in order to make some extra cash.
Trading from home
Being able to trade from home or even wireless-free via a laptop etc. has made a big difference to all the trading markets. However, trading in stocks and shares at work while your employer is paying you to work for him is likely be frowned upon. Trade from home or even in the caf? during your lunch hour.
All you need to start trading in currencies is a computer with internet access and a trading fund. Your initial fund doesn’t need to be big, and if you invest wisely it will grow. As well as these two basic things you will also need an understanding of the market and, if you are going to do this seriously, a plan.
A plan doesn’t have to be complicated or fancy, just a piece of paper which lays out a few rules. Write these rules before you start trading and refer to them often. The steps you are going to take to avoid taking too big a risk should also be included here. Risk Management is a big part in trading of any kind. You need to remember that you won’t make vast sums of money on each and every transaction: in fact, you may very well lose on many of the them. Having an overall plan as well as a smaller plan for each investment will help.
Trading shouldn’t be like gambling, but what you are doing is buying a product with the expectation that it will increase in value. On the surface it may look a bit like gambling, but your purchase should be based on an informed choice, i.e., you are buying a currency at a low price but have a good reason to believe that the price drop is a ‘blip’ which you can work to your advantage.
A good forex trader will also have plenty of patience. A ‘blip’ can last for a few days, a few weeks or even months. You may also see a further fall in value before you see a rise. All kinds of things can affect the value of a currency, and the value of research can not be overstated.
So, if you are thinking of trading as an option to either increase your cash flow or as a business opportunity, currency trading is well worth considering.
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