The Forex market (Forex) is an international currency market, which is a kind of virtual platform on which the price of currencies of different states is formed in real time.
The Forex market does not have a common single exchange (platform), which distinguishes it from the stock market. Since this market is international and conditionally divided into several trading sessions - European, Asian and American. Forex trading is conducted around the clock and seven days a week. That is, you can earn money at any time convenient for the trader.
How forex works
Initially, the currency market was created so that banks, large companies and states exchange currency with each other. Either, for example, they bought dollars for yens or sold euros and bought pounds and stuff.
However, as you know, demand creates supply and the market itself, which appeared in 1971, has become interesting for currency speculators - traders.
The term "trader" is derived from the English "trader", and it is applied to traders who are engaged in making profit in the stock and foreign exchange markets, making purchase / sale transactions.
Becoming a Forex trader, everyone acquires a risky, but highly profitable profession. The main thing is to understand how to properly organize your earnings on the Forex exchange.
Making a profit by speculating on the currency is not difficult in itself. It’s the same as buying somewhere jeans for 3,000 rubles and then selling them elsewhere for 5,000 rubles. So with the currency. Today it can be bought at one price, and tomorrow, if the price rises, it is profitable to sell. True, the bank will take its commission, but the principle remains the same.
Another option is possible: the price may not rise at all, but rather fall. And then you have to either sell yourself at a loss or wait until the price goes up again.
Maybe the third one - the currency was bought, and the price went down, as the trader did not expect, down. You can buy more currencies, thereby averaging the cost of the purchased currency, and sell, having waited until the price goes up. This forex-earning strategy is called "averaging."
Sometimes it is justified, but often quite risky, since the value of the currency may not begin to grow in the near future, but continue to fall. In such a situation, it is very easy to quickly go negative.
How to make money without investing
You can make a profit on Forex if you have trading capital. At his expense, purchase / sale transactions are concluded. To make money, they must first be invested in some currency, which can subsequently be profitably sold.
However, if a trader is already experienced and has figured out the principles of trading and the movement of prices, then he may well give advice to others and receive his interest from profit.
Of course, for this you will have to constantly monitor the political and economic situation in the world and analyze the market situation, but the reward for these works is very worthy.
Some, being confident in their abilities, can offer the investor their services as a hired trader. In this case, the investor opens an account, and the hired trader trades on it. Profits are usually divided in half, and if things go well, investors themselves will offer their money.
It turns out that making money on Forex without investments is impossible, the whole thing is only whose money it will be.
Four conditions necessary for a safe start to trade
In order to safely trade in the market, certain skills and knowledge are required. Otherwise, you can end the trade on the same day when they started ...
If you decide to become a professional trader, then these conditions are mandatory in any case.
1. Initial trading capital
Making money on Forex from scratch is almost impossible, except for criminal and immoral methods. To earn a trader, you definitely need start-up capital - yours or your investor, no matter.
Working at Forex is a cross between investment and speculation. It is considered an excellent result when a regular profit of 5 to 10 percent comes monthly. This is an average of 5% to 100% per year.
This may be the Forex trader’s earnings if he does not reinvest profits in trading, but withdraws and spends.
If profits are not withdrawn, but capital is constantly increased, then a complex percentage comes into play - percentage by percentage. In this case, the profit for the year can reach 100-500 percent.
But this is only a theory. Practice says that only a few can regularly receive profits on Forex, which could be compared with interest on deposits in an ordinary bank. As a rule, it is from 8 to 15 percent per annum.
It turns out that if the goal is to earn $ 50 a day ($ 1,500 a month), then we need trading capital no less than ten times larger.
2. Trading experience and special knowledge
In order to gain experience, you need to trade, and to gain knowledge, you need to read special literature, watch videos on the topic of trading in the market, and trade and learn how to earn money on Forex. Testimonials from experienced traders can also help with your studies.
The best option to gain experience is to find a worthy mentor and learn from him, observing his trading and methods of analytics and making forecasts.
Where to find a mentor (experienced trader):
- among acquaintances and friends;
- on the forums on the Internet on the topic of Forex;
- in dealing centers and brokerage companies;
- at events and special seminars on Forex trading.
When choosing a mentor, it is recommended that you pay attention to the following:
- Forex trading is a hobby or the main source of income for it. A real trader will not look for earnings anywhere else, even with large incomes.
- The results of his trading on different accounts for the year at least. As the market is constantly changing, profit in one month may turn into a loss in the next. It is advisable to find out how many total accounts this trader has - maybe his profit is only on one account, and on others there are big losses.
- If the future mentor stably receives profit from trading, then he will not hide anything and will demonstrate in real time how he trades on a real account. If he refuses to trade in public - there is reason to think about whether to continue business with him.
3. Time and strong nerves
When a trader opens a new position, he immediately sees how price fluctuations change the size of a trading account. After a few seconds, it can increase by $ 100-200, and in the next moments, decrease by any amount, up to zero.
But the trader did not close the deal as soon as it got a plus, but continued to watch the chart. Obviously, he was hoping to get even more profit. And this is the first enemy of the trader - greed.
There is an opposite situation - the deal goes into minus, but the internal fear “says”: “Close the deal until everything is leaked!” And the trader closes the order and after some time sees that the price has reversed and the deal would be profitable. But it’s too late, the moment is lost.
Understanding when to close a deal, and when to wait, comes with experience and sometimes you have to wait for this for years, and only then does Forex earnings start to make a profit. Feedback from traders speaks about this - patience and systematic work on oneself is the key to success.
When engaging in any business, it is important to remember the “golden” rule - never open your own business with money that is recent or borrowed unless there is sufficient experience for such a risk.
You should always have in stock a certain amount of money "for life", while a beginner learns to trade in the market. Or you need to have some other source of income, so as not to lose the latter and not to be disappointed in Forex, not yet starting to earn money.
Like any job or business, real Forex earnings have their pros and cons.
Forex Trading Benefits
- You can earn a lot and quickly.
Due to the fact that the broker provides leverage, you can turn $ 50 into $ 500 in one day. Another question is whether the risks are justified.
- The amount of earnings is not limited by anything.
Probably known to almost everyone, the financier George Soros earned more than a billion dollars in just a night ... The amount of earnings depends entirely on the trader.
- The simplicity of the work.
If we consider trade from the technical side, then it is no more complicated than a computer game or using a mobile phone. But the results, if successful, can be very real and not small.
Cons of Forex trading
- High risk of losing all funds.
Most often, brokers offer 1x100 - leverage. This means that the broker pays for the trader 99 parts for one part of it. The trader invests $ 10 in the transaction - the broker sponsors them another $ 990.
Therefore, a trader can open an order not for $ 100, but immediately for $ 10,000. Naturally, even a slight fluctuation in the exchange rate of a currency pair entails a rapid increase or decrease in the balance.
The lack of experience of the trader and the excitement during the trading, make the chance to lose is very large.
- Work requires exposure and strong nerves.
If we talk about the first earnings on Forex, reviews suggest that beginners sweat their palms and even increase their heart rate. Especially if the deal is big. That is why it is not recommended to engage in market trading for people with heart disease, nervous and overly emotional.
Very often, initially healthy people develop over time the so-called gambling addiction or ludomania - that is, traders can not stop and play, despite the losses, until they lose everything. Some even begin to borrow, take loans, sell things from home - just to make another deal and continue to play. Such behavior is already a serious disease and you need to be extremely careful not to cross this invisible line.
- There is no guarantee of regular earnings.
Not one, even the most experienced trader, is ever sure that he is guaranteed to work tomorrow or next month and will not suffer losses. It just doesn’t happen. Therefore, experienced professionals evaluate their trading periodically - quarterly or annually.
Thus, previous success in no way guarantees victory in the future. Risk is always present and only on the trader’s ability to correctly evaluate it, the success of the trade depends.
Step-by-step instructions for earning Forex for beginners
It is not easy for a person who is not familiar with the basic principles of trade and the nuances of such earnings to get the right start on the currency market. Therefore, it is recommended that all novice traders take the appropriate courses, best of all with the broker with whom further work is planned.
In addition to knowledge and skills, work on the "system" is extremely important, especially for a beginner. Trading discipline will allow you not to lose your money in the very first days, which often happens if you do not follow the rules or trade without a personal strategy. Trading according to plan, with strict adherence to its rules, is the key to successful trading in any market.
Having studied and steadily adhering to the step-by-step instructions for making money on Forex, a beginner will be able to avoid frequent mistakes at first, and later it will help anyone, even an experienced trader.
The first step - choosing a broker to trade on Forex
- A broker company that provides traders with the opportunity to trade through their platform in the Forex market.
Undoubtedly, the success of the trader also largely depends on the broker. If the broker is unreliable and dishonest - you can never see what you have earned ... Therefore, you should be very careful when choosing a broker.
When choosing a broker, you should pay attention to:
- The seriousness of the site is whether the broker is officially registered, whether there are documents on the implementation of brokerage activities and how long the company exists.
- The size of the trading account of the trader. It can be from a dime to hundreds of dollars.
- The size of the spread (trade commission). Spread - the difference between the purchase price and the sale price. In other words, this is a broker's commission. It is more profitable for a trader to conclude transactions with a minimum spread.
- The level of service and bonuses to traders. It is important how quickly and easily a trader displays his Forex earnings. Reviews from brokers are a great way to understand this. It is also important how quickly responds and how friendly the support service and staff of the brokerage company.
The second step is the selection of financial instruments
In order to start trading on the market, you need to install a trading platform on your personal computer. It differs in interface and functions of different brokers.
The classic Forex trading software is Metatrader version 4 or 5. Most brokers use it.
For full use of the program, you need to understand its capabilities, study the instructions. You can find it on the Internet or ask a broker.
After there are no questions left with the trading platform , it remains to choose the trading pair on which to trade. On Forex, these are currency pairs - Swiss franc-dollar (USD / CHF), euro-dollar (EUR / USD) and others.
Before trading, the chart and the current price movement are carefully studied. Subsequently, with the advent of experience in the market, you can trade two or more pairs.
The third step - training on a demo account
At this stage, trade begins directly. First you need to open an account - while training or demo. When opening an account, it is better to focus on the amount with which future trading with real money is planned. For example, $ 500 or $ 1,000.
It is recommended that you work on the training account for at least a couple of weeks in order to understand how to trade using the terminal (trading program).
Trading on a demo account is recommended to be treated as a real account. If you thoughtlessly take risks and chase ultra-high profits - there will be no benefit.
The most interesting thing is that when trading on a demo account, for most novice traders, after a few days, a substantial profit is reflected in the account. But when it comes to trading on a live account, everything is not so simple. The fact is that the main obstacle to stable Forex earnings is the emotions of the trader.
The fourth step - trading on a live account
If a broker provides such a service, then it is better to start trading on a cent account. Although trade will be in small amounts, it will not be too scary to lose a lot. But at the same time, despite the fact that the account is cent, you can earn pretty decent money on it. And the risk is minimal.
In case of success, when after a while enough funds are accumulated in the account, you can open a dollar account on them and start trading large. But it is not recommended to hurry, because according to statistics, beginners, before making their first big money, merge several of their deposits.
The fifth step is break-even trading
To trade without losses, in no case immediately try to earn a lot. The task for the first time is not to “merge”.
Only after self-confidence appears and the trading account will at least not become smaller from deal to deal, you can begin to think about how to make more profit from trading.
Sixth step - earning first profits
Perhaps the most memorable and exciting moment for a beginner is to get his first profit.
However, in practice, often the profit as it arrived is just as fast and goes away ...
Here the saying is appropriate: “A sign of a trader’s skill is a stable result!”
A real trader who can be called a professional is not the one who was able to increase capital in a few days, but the one who trades profitably for months, years. Someone who knows how to manage risks and shows constant profits and systematically increases the trading account, albeit not every day and not by large amounts.
It is very important to constantly analyze your trade and try to understand why the price movement of a particular currency depends.
Experienced traders are advised to learn how to handle interest. So, for example, if you manage to steadily increase the balance by 5-10% every month, having $ 100 in your account, then the next step will be to try to do the same, but with $ 200. If it works out, then gradually you can increase your trading account by 2-3 times or more.
The point of successful trading is not to learn how to make $ 1000 with a couple of days in a couple of days, but to be able to systematically receive a certain percentage of profit from any trading capital.
The main thing to remember is that Forex is not a game or a hobby. Trade is work. Serious and heavy. Only then will it be possible to get stable Forex earnings.
How to make trading successful
The first enemies of any trader are greed and fear. Making money on Forex is not a war with other traders and not a rivalry over who buys more or who closes a deal earlier. First of all, trading is a struggle with oneself. Or rather, with your emotions.
You can never open positions, guided only by emotions or not thinking at all. Otherwise, sooner or later, trading will turn into a game, akin to a casino, and trading capital will inevitably be lost.
- Trading only by strategy.
Various Forex trading strategies can be found in books and the Internet. It can be found for every “taste" - both for certain trading instruments and for various trading periods (short-term, medium-term, long-term trading).
Never need to invest large amounts in one transaction. Losses need to be cut off on time. To place orders only with the possibility of forced closure, upon receipt of sufficient profit (take profit) or unexpected losses (stop loss).
In the case when the trade suddenly did not go as planned, you should immediately close the deal. Do not leave the position open, hoping that the price is about to turn around in the right direction.
- Continuous practice and training.
It is important to never stand still. A trader must constantly develop in a professional sense. This is helped by training and courses on Forex trading.
A great option for a beginner in trading is to find yourself an experienced mentor, communicate with those who have already gone the path of a novice trader and, most importantly, who are now successfully trading on Forex.
Earnings on Forex on the Internet, makes it possible to earn a lot and quickly. Moreover, the size of income is not limited to anyone, but there is a very high risk of losing all the money.
It is possible and necessary to reduce the degree of risk if the goal is to seriously engage in trade.