IS FOREX TRADING A HIGH INCOME SKILL? Let's dive into it
IS FOREX TRADING A HIGH INCOME SKILL?
Do you think
forex trading should be mentioned as a high income skill? Well, I think it
should be, especially when it is understood and done strategically. I will go
into details why forex trading is a high income skill, why it should be an
option for you and basic steps on how to begin as a forex trader.
Before we
start, I would like you to know this: 15% of forex traders are profitable
according to a survey by Forex School Online. 37% either break even or make
profits. But you should know 63% of traders are not profitable due to several
reasons.
In the UK,
the average salary for a Forex Trader is around 155,634 pounds annually, these
are for professional traders working for firms. In New York, traders earn
between 125,550 and 161,110 dollars annually.
WHAT IS FOREX TRADING?
ForexTrading which is also known as Foreign Exchange Trading is the buying and
selling of currencies on the Foreign exchange market with the aim of making
profit. The forex market is the largest financial market in the world, with
daily trading volumes exceeding $6 Trillion.
A Forex
Trader is simply one who trades the forex market, buying and selling currencies
to make money.
BASIC PRINCIPLES IN THE BUYING AND SELLING OF CURRENCY
1. UNDERSTANDING CURRENCY PAIR
· Base and Quote Currency: In a currency pair, the first currency is the base currency, and the second is the quote currency.
For example, in the pair EUR/USD, EUR is the base currency and USD is the quote currency.
· Exchange Rate: The exchange rate shows how much of the quote currency is needed to buy one unit of the base currency.
For example, if EUR/USD is 1.20, it means 1EUR can be exchanged for 1.20
USD. In other words, 1EUR=1.20 USD.$$
BUYING AND SELLING (Going Long and Short):
· Going Long: This means buying a currency pair e.g buying EUR/USD. This means you believe the base currency (EUR) will increase in value relative to the quote currency (USD).
· Going Short: This means selling a currency pair e.g selling EUR/USD means you believe the base currency (EUR) will decrease in value relative to the quote currency (USD).
3. PIP:
A pip is the
smallest price movement in the exchange rate of a currency pair. Most currency
pairs are quoted to four decimal places, so a pip is typically 0.0001.
Understanding pips is important for calculating profits and losses.
4. LEVERAGE:
Leverage
allows traders to control a large position with relatively small amount of
capital. For example, with 100:1 leverage, you can control $100,000 with just
$1,000. While leverage can amplify your profits, it does increases the
potential for significant losses.
5. SPREADS:
This is the
difference between the bid (selling) price and the ask (buying) price. Brokers
typically make money from the spread. The types of spread include;
·
Fixed Spread: this remains constant regardless of
market conditions.
·
Variable Spread: fluctuations based on market
conditions.
6. MARKETING
ORDERS AND PENDING ORDERS:
·
Market Order: It is an order to buy or sell a
currency pair at the current market price.
·
Pending Order: There are orders that are set to be
executed at a future price level. It includes buying or selling at a specified
price or better (limit order) and buying or selling when a certain price is
reached (stop order).
7. RISK
MANAGEMENT:
There are
tools to manage risk involved with trading.
· Stop-Loss Orders: An order which is placed to sell a currency pair when it reaches a certain price, limiting your loss on a position.
·
Take-Profit Orders: This is an order to close a
position once it reaches a specified profit level.
8. FUNDAMENTAL
ANALYSIS:
It involves
evaluating a country’s economic, political and social condition to predict the
future movement of its currency. You can do this through:
· Economic Indicators: You can analyze economic data such as; GDP, employment figures and interest rates to predict currency movement.
·
News Events: Major news events such as; central
bank announcement or geopolitical development can impact currency prices.
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9. TECHNICAL
ANALYSIS:
This
involves studying past market data, price and volume to forecast future price
movement. You can do this through:
· Charts and Indicators: Traders use price charts and technical indicators e.g moving average, RSI, MACD to identify trends and make trading decisions.
·
Patterns: Recognizing chart patterns like;
head and shoulders, double tops and flags can help predict future price
movement.
SKILLS REQUIRED FOR FOREX TRADING
Becoming a
successful forex trader requires a blend of technical skill, analytical ability
and personal attributes. These are skills you will need to learn to be a
successful trader:
1. TECHNICAL
SKILLS:
This
includes; the ability to read and interpret different. This includes; the
ability to read and interpret different types of charts. Understanding how to
use indicators to identify trends, reversals and market conditions.
You should
gain familiarity with trading platforms like; MetaTrader 4, MetaTrader 5,
Trading view and other brokerage software. Skills to backtest trading
strategies using historical data to assess their viability.
2. ANALYTICAL
SKILLS:
This
includes; gaining the ability to interpret economic indicators such as; GDP,
inflation rates, employment, understanding the impact of central bank policies
and geopolitical events on currency markets, proficiency in calculating
position sizes, setting stop-loss and take-profit levels and also skills to
filter out noise and focus on impactful information.
3. PERSONAL
ATTRIBUTES:
You will
need to be disciplined to stick to a trading plan and avoid emotional trading
decision. Be patient enough to recognize profitable trades which will take
time. You need resilience to cope with losses and learn from mistakes, be able
to adapt and adjust to trading strategies based on changing market conditions.
4. EDUCATIONAL
AND DEVELOPMENT SKILLS:
Be committed
to ongoing education through books, courses, webinars and seminars. Engage with
other traders through forums, social media groups and trading communities.
Regularly review and analyze past traders to identify strengths and weaknesses.
5. PRACTICAL
EXPERIENCE:
Gain experience
through demo accounts before committing real money. Test strategies and build
confidence using demo trading, gradually transition from demo to live trading
with small amounts. By combining these skills and continually developing them,
you can increase your chances of success in the dynamic forex market.
SUCCESS STORIES OF HIGH INCOME FOREX TRADERS
1. REF WAYNE:
He is a
South African forex trader, author and entrepreneur. He began trading forex as
a teenager and quickly found success. He founded the African Forex Institute.
Wayne has
written several books on forex trading and continues to educate and mentor
aspiring traders. He is estimated to have made several million dollars from
forex trading.
2. RAGHEE HORNER:
She is a
forex trader, author and trading educator. Horner has been trading forex since
the early 2000s and is known for her technical analysis skills and trading
strategies.
Exact
figures are not publicly available but she is known to have made substantial
profits from forex trading over her career.
3. SANDILE SHEZI:
He is one of
South Africa’s youngest millionaires. He made his fortune through forex
trading, he invested his tuition money into forex trading and saw substantial
returns. He is now the founder and CEO of Global Forex Institute, which aims to
provide affordable and effective forex training.
4. GREG SECKER:
He is a
British trader, entrepreneur and international speaker. He started trading in
the early 2000s and quickly made a name for himself. He founded Learn To Trade,
a company that provides forex trading education and training. He is reported to
have earned millions from his forex trading activities.
5. NJABULO NDLOVU:
He is a
Zimbabwean forex trader and mentor. He started trading forex in his home
country and has since become a well-known figure in the African Forex trading
community.
He has been
recognized for his educational contributions and his efforts to promote
financial literacy.
EDUCATIONAL RESOURCES AND COURSES FOR HIGH INCOME SKILL
Looking for
how to start your forex trading journey? I handpicked reputable educational
resources and courses that can help you develop high income skills in forex
trading.
1. BabyPips
2. Forex Academy
3. Alison
4. Udemy
5. Coursera
6. Daily FX
7. ForexSignals.com
1. BABYPIPS:
The course
which they offer is called School of Pipsology. Babypips offer one of the most
comprehensive and beginner friendly resources.
2. FOREX ACADEMY:
They offer
various courses on forex trading strategies, technical analysis and risk
management. They include video tutorials, articles and interactive content.
3. ALISON:
This is an
educative platform which includes different courses ranging from technical
analysis to fundamental to risk management to buying and trading of currency. The
best part is they are free and it comes with a certificate, although the
shipping of the certificate to wherever you live isn’t free.
4. UDEMY:
You can take
a course called Forex Trading A-Z with live examples of Forex Trading but it
isn’t free.
5. COURSERA:
You can
learn a course called Trading basic. It is offered in the University of Geneva,
it provides an introduction to trading, including forex trading concepts and
strategies.
6. DAILY FX:
There is a
course called Forex for Beginners which provides a series of educational
articles, webinars and trading guides designed to help beginners get started in
forex trading.
7. FOREXSIGNALS.COM:
It provides
a course called Professional Forex Trading Course. It offers complete course
with video lessons, webinars and access to trading mentors.
In conclusion,
Forex Trading is a high income skill when leant well, although there are risk
attached to it and you might not always win and you should be ready for such
risk as you embark on your trading journey.
Do you thing
Forex Trading is a High Income Skill? Leave a comment in the comment section.
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