At the beginning of the year, the Central Statistics Office delivered the promising news that unemployment in Galway had dropped by 12 percent over the past year. It was most likely as a consequence of this that the percentage of people going it alone as self-employed or sole proprietors also dropped, particularly when compared with the rest of Ireland.
Taken at face value, the logic is sound. When job opportunities are scarce, and employers are laying staff off, there is a greater trend towards trying to go it alone. It is only logical to conclude that the converse also holds true.
However, if the tough times of the past decade or so have taught us anything it should be that there is no such thing as a job for life anymore. People of all generations have realised they need to look to their own ingenuity and skills to make a living and provide for their families, both on a day to day basis and when it comes to planning for the future. The idea of Forex trading is one that is garnering a growing appeal as a way to do exactly that.
What is Forex trading all about?
Forex is an abbreviation of foreign exchange. It is the buying and selling of currencies, or to put it more accurately, the exchanging of one currency for another. The market is huge. Mind-bogglingly huge. Over five trillion dollars is traded every single day, making the market far, far larger than any other kind of exchange on the planet.
The word “exchange” is key to understanding Forex. We just mentioned that it is not just about buying and selling a specific currency, but about exchanging it for another. The reason this is so important is because it raises the concept that when you are trading Forex, you are always looking at pairs of currencies.
For as long as there have been currency exchanges, there have been people using them to make a profit. It is something that anyone can do. However, it is worth remembering that for every trade that makes money, there is an equal and opposite trade that comes out on the losing side. To make money on the Forex market, you need to go in with eyes open and a clear strategy in mind.
What’s your strategy?
Forex trading, then, is certainly not a guaranteed money spinner. Anyone new to it needs to put in plenty of time and effort understanding how the market works, to learn how to read the various financial indicators and so on. In this modern internet age, there is no shortage of resources to guide you along the way, but you still need a starting point.
Essentially, you have two choices, you can either play the long game, known as positional trading, or adopt short term, or day trading strategies. The latter is often perceived as being higher risk, but it provides the better opportunity to learn quickly. If you adopt recognised short-term Forex strategies that work, you make money, while adopting sound risk management strategies to protect your account from disaster.
Day trading is not a lottery
There are plenty of people who believe day trading to be a high-risk strategy – but the reason has nothing to do with the markets and everything to do with self-fulfilling prophecies. Most of those who are new to trading and jump in blindly go in search of short-term gains with little idea of what they are doing. Unsurprisingly, they come out older, wiser and poorer, and the myth that day trading is somehow dangerous is further perpetuated.
No form of investment is 100 percent risk-free, but when you follow a clear strategy, day trading actually carries lower risk than positional trading. This is because short-term trading minimises your exposure to significant losses.
The other reason that critics can sometimes be nervous about day trading is that there is far fewer data to go on when forming your strategy. For example, if you look at the opposite extreme of investing in, for example, precious metals, you can assess weeks and months of data, including economic indicators, socio-political trends and so on. But in day trading, everything happens so fast, you need to be alert and ready to react to events as they transpire.
An intensive course in Forex trading
In many respects, day trading is the Forex equivalent of taking an intensive driving course. It won’t make you an experienced master trader overnight, but it will throw you in at the deep end and get you up, running and working with all the tools and indicators as quickly as possible.
Trading Forex can be a valuable way of generating additional income for those times when you need it most. And as long as you manage risk by setting and sticking to sensible limits on every trade, you remain in complete control.