Online forex trading is the key to financial independence. But before you reach the promised land, it’s important you understand the innerworkings of how online Forex trading operates. Blindly chasing after this assumed golden ticket to fortunes can end up hurting you more financially than it can help you. Below is a comprehensive guide for the novice to intermediate trader.
Benefits of Trading Forex
As mentioned earlier, online forex trading is the key to financial independence. With it, you can work full-time from the comforts of your home, simply clicking the mouse and never having to tolerate unfair bosses and irritating coworkers.
Since the business is a stay-at-home sort of work arrangement, you are also free from alarm clocks clanking away at 5 in the morning, the depressing morning traffic rush, and the stale pot of coffee at your office among other things.
Income in Forex trading is also limitless. You can make $1,000, $10,000, or even $100,000 per month. While taxes tend to be higher for income generated through trading, you can end the year with a decent paycheck if you actually know what you’re doing.
How to Achieve Financial Independence Through Forex
There are countless ways to trade Forex, the most common of which is referred to as spot trading. Basically, traders attempt to predict the future direction of a currency pair relative to its current price action. While it seems simple enough, there are many technical, fundamental, and psychological drivers at play that affect your long-term P/L.
One thing to remember when trading Forex is that risk management is more important than short-term profits. Even as an open position moves in your favor, if risk parameters were neglected, it is considered a poor quality trade. For every trade you open, risk should be identified and prepared for.
Researching Your Market
Research is another important skill to acquire when trading Forex. In a nutshell, you have two types of data to process – fundamental and technical. The fundamental aspect of trading revolves around macroeconomic and microeconomic factors. Supply vs demand is the key principle to take note of along with regularly distributed reports of economic output.
Technical analysis is the numbers-side of the coin. It tackles differential interest and rollover rates, indicators including Bollinger Bands and MACD derived from historical price data, and even the high-tech electronic trading systems and algorithms that drive today’s exchanges.
To achieve consistent returns on investment, it is ideal that you strive to achieve a balance between fundamental and technical analysis. Learn and master both areas, but take only techniques and concepts that supplement your trading approach. You don’t want to drown yourself in too much information as this only burns you out more quickly.
It is true that online forex trading is the key to financial independence. However, it is only through finding the right trading system, developing solid fundamental and technical bases, and managing risk appropriately can you hope to turn Forex into a full-time business.