If you’re looking for an easy way to make money, why not try currency trading? Launching a business that allows you to get paid for taking a punt on the economy is a real no-brainer. What’s more is that you don’t need any particular expertise to get started. All you need is a PC or a mobile device and the willingness to take a bit of a flier on the world’s economy.
Thanks to technology, platforms such as MetaTrader 4 allow beginners to enter the market and even experienced traders to take a quick look at the day’s action. Here’s a guide to earning money trading forex online, explaining how it all works and where you can make the most of it. Read on to discover the best ways to cash in on the booming world of forex.
The Basics Of Making Money Trading
To understand how to make money trading forex, you need to know a few key facts about the subject matter. First, forex (short for “foreign exchange”) is the market for currencies. Just like the “local” bus driver who changes US dollars for British pounds or euros, a foreign exchange market operator makes money by matching buyers and sellers of currencies. In addition to operating the digital market, the company also provides the tools for users to conduct financial transactions.
Since there’s no set rate for currencies, the only way to ensure you get your money back is to assume the role of a merchant who takes a financial risk.
Here are some more fundamental facts you need to know about trading forex:
While many people think that trading forex is a shady activity, this isn’t true. In fact, it’s completely legal. That’s because the Foreign Exchange Act of 1982 established federal regulations for currency trading, which took effect in April 1984. In the eyes of the law, forex traders are no different from market makers or institutional investors who play the same role in other stock markets.
Interesting Facts About the Industry
Before we begin to overview how to make money trading, it’s important to know a few interesting facts about the industry. First, the foreign exchange industry is a multitrillion-dollar one, with annual revenue of over US$10 billion in 2017. Second, Forex is the largest market in the world by value, with a daily average of $5 trillion in transactions in 2017. Third, forex has one of the best reputations in terms of safety and professionalism in the financial-services industry. The CAC, the regulatory body for trading of financial instruments in Australia, awards forex for “high standards of corporate governance, information security, and customer care”. In addition, over 80% of all forex trades are now done electronically, which has helped to drive down operating costs and increase efficiency. Lastly, over a third of the world’s population now lives in countries where the use of credit cards is not yet mainstream, which provides plenty of room for growth.
The Types Of Trades
Many people think of currency trading as involving high-risk, fast-paced bets on the direction of a few major world currencies. However, this isn’t true. For one thing, forex traders are not actually betting on the movements of currencies; they’re attempting to predict the movements of the underlying markets. In other words, just because currencies change hands doesn’t mean that the market for those currencies is moving in the same direction.
A good forex trader will try to identify specific patterns in the market that can be used to create buy and sell signals. For example, if the pound drops in value against the Japanese yen and the euro, this may be a sign that a broad trade in UK-based treasury instruments could be in order. Alternatively, if the Mexican peso gains value against the dollar, US exporters may have hit on a new strategy for gaining market share in an effort to protect existing sales.
These are just two examples of the many ways in which traders can use historical trends and prevailing sentiments in the financial markets to their advantage. As a result, trading forex can often involve some pretty sophisticated strategies that are a lot more sophisticated than simple bets on the movement of currencies.
In addition to currency trading, some investors also get lucky and make a lot of money by playing the long game. For example, let’s say you see the US dollar falling against all other world currencies. To make money from that trade, you would simply get in the opposite direction at the same time as everyone else, building up a position in the other currencies while the dollar falls.
The Various Indicators
To understand how to make money trading, it’s important to look at the various indicators that can be used to analyse the market situation. First, there’s the gold/dollar exchange rate, which measures the popularity of gold as a store of value in relation to the dollar. As the price of gold tends to rise and fall in line with the dollar’s fortunes, an increasing gold/dollar exchange rate may indicate that the future of the greenback is looking pretty bleak. In other words, if you’re viewing this indicator, it might be a good idea to light up on the dollar.
Next, let’s examine the euro/dollar exchange rate, which measures the popularity of the euro as a global currency in relation to the dollar. Like the gold/dollar indicator, the euro/dollar exchange rate can also be used to track the cost of living in dollar terms. As the dollar drops and the euro rises, this may be a good time to buy into other European currencies or stock in European companies that trade overseas.
Where Can I Make The Most?
With all the essential facts about money making in the foreign exchange industry out of the way, it’s time to hit the road to riches. You can make a decent living as a foreign exchange operator, but where can you make the most?
Firstly, online platforms are the place to be. Thanks to technology, all you need to make a profit is a reliable Internet connection, a PC or mobile device, and access to financial markets. As we’ve established, over 80% of the world’s forex trades are now done electronically, which means you can take advantage of this trend on a large scale.
Secondly, look at emerging markets for investment ideas. If you’ve ever watched the financial news, you’ll know that emerging markets have often been at the centre of volatile events, which means they can provide fertile ground for speculation.
Thirdly, bear markets in developed markets such as the United States and Japan can also be profitable, albeit more so in the long term, as these economies have a much larger impact on the world stage. Lastly, follow the money. By looking at the various brokerage firms that serve the needs of individual and corporate clients, you can get a sense of which ones are growing and which ones are losing business. Keeping an eye on these trends may help you to determine the future direction of financial markets.
To wrap things up, trading forex is one of the best ways to make money quickly and safely. Because the industry is so large, there’s always plenty of opportunity to make a buck. In addition, unlike many other investment opportunities, you don’t need any particular expertise to get started. All you need is a PC or a mobile device and the willingness to take a bit of a flier on the world’s economy.
Thanks to technology, launching a business that allows you to get paid for taking a punt on the economy is a real no-brainer. What’s more is that you don’t need any particular expertise to get started. All you need is a PC or a mobile device and the willingness to take a bit of a flier on the world’s economy.