If you’re looking for a way to make some extra money in your spare time, then forex trading could be an appealing option. It offers an opportunity to make great profits from buying and selling currencies around the world and is something that can be done as a full-time career or simply in an hour or so a day. In order to begin making money from forex trading you’ll need to know a lot about the markets as well as possess the following things.
Good Time Management
Full-time traders will spend a lot of time sat in front of screens, monitoring price changes and events so they can capitalise on any opportunities. If you are trading forex only for an hour or so a day you may therefore feel like you will miss many great chances to invest. Strong time management skills are necessary to ensure you are open to make the most of such opportunities, being efficient when making trades in the limited time you have available.
The Right Tools
For those who are really limited for time to make forex trades, it can be worth using a forex broker to do so for you. Otherwise, possessing vital tools to make trades yourself is key. This includes a quality trading platform so you can begin exchanging currencies online or via mobile and tablet apps. Economic calendars and calculators are useful tools as well, to help you decide when to trade based on upcoming events and how much.
Understand the Risk/Reward
The majority of forex traders, even the most successful ones, lose more often than they win. What makes them successful is their ability to contain losses and maximise wins, by understanding and balancing their risk/reward ratio. A general rule is not to risk more than 1 or 2% of your capital in one trade, while setting stop losses is essential. Reading up on risk/reward and using the analysis features of trading platforms should help you avoid losing masses when trading forex.
Decent Amount of Starting Capital
As forex is a leveraged product, you do not need huge amounts to begin trading. Especially if you are only doing it in your spare time to make some extra money, the starting capital doesn’t have to be too large, unlike when trading full-time. There are fees included with trading, such as commission, which must be remembered when working out your starting capital. Still, you must be prepared to risk a fair amount to have much chance of making money from trading forex in your spare time.