The quest to earn more passive income while going about one’s other engagements has attracted many into forex trading today. Some investors now consider forex trading as a residual source of income to support their monthly earnings. Others have even embraced forex as a full-time business from where they derive their source of living. This work has therefore considered the advantages and disadvantages of forex trading. We have further weighed the average profit made by forex traders to determine if forex is a good investment package for investors today.
What is forex trading?
Forex trading is a foreign exchange platform that provides the opportunity for investors to benefit from the fluctuations in the prices of various assets traded. These include various currencies, commodities, stocks, Indices, etc. The word forex has been derived from the combination of two root words known as Foreign exchange. Hence, one can say that forex trading is a global exchange platform for traders across the globe.
Why do people trade forex?
Generally, people trade forex to make profits from the price volatility of the various assets traded. This is why most assets are traded as CFDs in the forex market today. Added to this, investors also turn to forex as a hedge against inflations.
Above all, forex trading offers traders wild exposure to the financial market and helps them in identifying weak and strong economies through their currency values. This assists investors in making decisions on which country to invest in and which to avoid.
Is forex trading a good source of income for traders today?
Over the years, forex trading has yielded huge returns to investors who have invested wisely in the market. However, not all traders have so far benefited from the forex market too.
Often, we find that those who make the wrong predictions have found themselves losing money while trading. Consequently, forex trading could be said to be a good source of income for only traders who have mastered the market movement pattern and make correct predictions based on their analysis of the market.
How much do traders make from forex trading?
The amount forex traders make daily from the forex market varies based on the amount invested, the lot size used, and the overall price movement from one’s entry to the exit point. However, some aggressive traders often made above 30% of their capital in a month. Some even made more. The fact remains that there is no limit to what traders can make from the market as long as they remain in the correct market direction.
How can one trade forex today?
The first thing to do for anyone who seeks to trade forex is to select a broker to trade with. Brokers are intermediary agents that link traders to the forex market. Once this is done, the next step is to register an account with the broker, fund the account after completing the identity verification process and proceed to place one’s orders at the market using the MT4 or any other trading platform provided by the broker.
Advantages of forex trading
- Offers exposure to the financial market.
- Provides a residual source of income to investors.
- Provides an opportunity for traders to copy each other’s trade using the forex social trading platforms.
- It could be a full-time job for the unemployed.
- Leverages are offered to investors for trading.
Disadvantages of forex trading
- It is a risky investment.
- There is no guarantee for profits.
- The loss could equal one’s capital leading to a total loss of investment.
- Takes time to learn and master the market.
