Last Updated on June 12, 2024 by Namooki
How safe is forex trading? So think about Forex like this: I have a whole crate of eggs, and you have a bag full of sachet water. I need water, and you need eggs. So there is an exchange. That is classic Trade by barter. Great, now let’s swap things, instead of exchanging eggs with a sachet of water, you can exchange different currencies and assets worldwide. The goal is making a profit by buying low and selling high. It’s as simple as that. Now, imagine a platform that gives you access to that. So, what are those weird charts that people look at with different screens? An ability to measure the rise and fall in currency/assets prices in real-time.
Another good example is when you travel to another country. Say you are travelling from Nigeria to the United Kingdom. At the exchange booth, you hand over N500k and are given about 400 GBP (Don’t laugh at my currency, please. I am trying to be serious today). Forex trading is quite like that, but instead of one exchange, millions are happening all over the globe every day, hoping to exchange (forex – foreign exchange) at reasonable rates and make a profit. Forex can become a good source of passive income on your FI Journey like a boring business idea.
Is Forex a Scam? No It’s Not
You probably have heard people talk about Forex trading and give it a bad rep. 9.5 times out of 10, anyone who tells you Forex trading is a scam is either very ignorant of Forex or it has been painted as a get-rich-quick scheme. These are those traders that tel you they quit their day jobs, show you their Ferraris and Mercedes while travelling around the world. You then try it, putting your life savings with lack of proper education and all your money is gone. Sounds familiar? If done well, Forex can give you a good return on investment, but you need to educate yourself, be patient, and not be greedy.
Some YouTuber telling you He will teach you how to flip $10 to $1,000 in 7 days is a recipe for disaster. Like any financial instrument, it takes time to gain mastery and operate at a peak level. Secondly, would you not prefer to make $10 dollars consistently every day as compared to making $50 today, losing half of it the next day, then gain only $10 back the day after? In building wealth, you must prioritize consistency over the sudden fund pump.
How To Start Well
If you are very new to Forex, I advise you spend some time to educate yourself. Even if you would have someone trade for you or you would make use of computer algorithm. There are loads of platforms to learn, but if you are beginner, I highly recommend “Baby Pips” or “Forex Peace Academy“. These platforms break down concepts to the simplest level and also gamify the learning process, so it is fun to learn. While learning you can practice on what you call a demo account.
Think of it like the platform that allows to trade except it’s fake money. This is a good way to get very comfortable with the concept of forex trading. It’s important to note that when it comes to Forex, you have to adopt a T.F.A.P.P. mentality. It is a revolutionary approach in building wealth (ok, fine.. I just made it all up). It means you Trade From a Place of Peace.
Do not take your rent hoping to flip the money; don’t give your tuition to some trader promising a quick turnaround. It is dangerous and frankly irresponsible. Also, don’t focus on trading alone as a means of income refusing to get a job. Please get a job. You making $50 dollars bi-weekly (even if you can do that consistently) and withdrawing all of it to take care of your needs is not a sustainable way to build wealth. You want to be in a position where you can trade with funds that is not tied to anything and if you flush it down the toilet trading, it doesn’t hurt your day. So T.F.A.P.P.!
Have A Target
It’s common practice for serious traders to have a trading diary to log their previous day’s activity. What strategy has consistently been making you money? What currency pair are you most comfortable with? In addition to that, it helps you set a realistic target. How much would you like to make in profit per day (if day trade is your thing) or per week if you prefer to place trades that run for more than a day. If you can boast of $50-$100 per month in profit, you are doing fantastic. Too small? Tiny drops? Big boi!
Different Means The Same End
How much should you start with? What is the best platform to trade? Which of the best strategies can I adopt? What is Fibonacci? I’ll be interviewing a Forex Trader for part 2 of this article. In achieving consistent profit (depending on your risk appetite). There are two popular methods of profiting from Forex markets. One is the traditional trading, where you are solely responsible for every action or secondly where you rely on trading bots. Forex bots, sometimes called forex trading robots, are software applications designed to automatically execute trades in the foreign exchange market. They utilize technical signals derived from currency market prices to initiate trades.
These software tools can be set up to operate automatically and can be linked with online forex brokers or trading platforms. By analyzing historical price data through mathematical algorithms, forex bots assist traders in making well-informed trading choices. For instance, a forex bot might be programmed to purchase Japanese yen once the exchange rate against the dollar drops to a predetermined level. There can also be a hybrid situation where a well-learned trader confirms the bot’s Trade before executing. Whatever route you take, one thing is very clear: Forex is a money-making machine, but it’s not instant noodles. Be patient and T.F.A.P.P.!