It’s easy to see why people aspire to participate in the world of forex trading, thanks to the increased liquidity of major currency pairs and the opportunity to access optimal leverage.
However, it’s crucial that you recognise the volatile nature of the forex market, while understanding that lightly leveraged positions can cause you to lose considerably more than your initial deposit.
If you’re going to operate as a part-time trader, you’ll also have to create a viable working schedule that fits nicely in your everyday lifestyle. So, here are some things to keep in mind.
What are the Benefits of the Forex Market?
We’ve already mentioned the increased liquidity of major international currency pairs, which essentially means that they’re incredibly easy to buy and sell in the real-time marketplace.
This advantage is further augmented by the fact that currency pairs can be traded as derivative assets, which enables you to eschew ownership of the underlying instrument and speculate on potential price movements.
This makes it possible to profit even in a depreciating market, as you look to leverage volatility and use it to your advantage.
Beyond this, the forex market is accessible 24 hours-a-day, while credit brokers also offer access to reliable tools such as the MT4 web platform. This enables you to create a flexible trading schedule and execute orders in real-time, which is crucial if you’re to achieve success as a part-timer.
What are the Risks Associated With Forex Trading?
Most reputable brokers offer you leverage of up to 50:1 and 100:1, which enables you to open and control forex positions that are considerably larger than your initial deposit.
While this can translate into significant gains in the best case scenario, it may also trigger disproportionate losses with the deployment of available risk-management measures (such as stop losses).
The lack of ownership in the market also makes it hard to sustain profits over an extended period of time, as you cannot access a secure store of wealth that’s likely to steadily appreciate over time.
It’s also important to note that an estimated 70% of retail forex traders lose money, with this highlighting the challenges facing part-time brokers in the digital age.
Starting Small and Scale Over Time
If you’re a part-time trader with a viable, full-time source of income, the good news is that there’s no immediate pressure to make a profit.
This affords you the freedom to start small and by trading just one or two major pairings, as you limit your investment to a specified amount that you can afford to lose over a predetermined period of time.
From here, you can look to scale your efforts organically over time, in line with your newfound experience and increased profit margins.
This will ensure that you incrementally boost your earnings going forward, while striking the ideal balance between risk and reward in a volatile marketplace.
