Many students are looking for a way to earn money during their time in college or university. Most students want to find a way to earn money that does not infringe on their studies and gives them the freedom to work when they want to and relax when they want to. One way to earn money that can offer you just that is forex trading.
What is forex trading?
Forex trading is trading on the foreign exchange market. The foreign exchange market is a market where currencies are bought and sold. It is the world’s largest market with a turnover of more than USD $6.6 trillion a day. The trading on the forex market sets the exchange rates that you pay when you go on vacation or need to make a payment in a foreign currency.
The currency market used to be closed to retail investors. It was only open to banks and large financial institutions. The forex market now welcomes retail investors that can trade on the market through forex brokers.
The trading on the forex market is done through currency pairs such as USD/EUR, USD/GBP and USD/YEN. When you buy a currency pair you pay in one currency and receive the other currency. How much you receive when you make these trades depends on the current exchange rate. The exchange rate is decided by the market demand for the two currencies. The forex market works similarly to the stock market but people are trading currencies instead of stocks. The forex market only offers trading with fiat currencies. Cryptocurrencies are not traded on the forex market.
Many forex brokers will however allow you to trade with both fiat and cryptocurrencies.
A large percentage of the retail trading on the forex market does not involve actually buying and selling different currencies. Instead, you will be trading financial instruments that give you the right to receive the profit from any change in the value of the underlying currency pair. The instruments also obligate you to pay the loss if the underlying currency pair loses in value.
There are both bear and bull instruments available to trade. A bull instrument allows you to profit if the value of a currency pair increases. Bear instruments allow you to make money if the value of a currency pair decreases. This makes it possible to earn money regardless of whether the market value of a currency pair increases or decreases. You can make money as long you can predict the direction of the market movement.
Can you make money trading forex?
Yes, it is possible to earn money trading on the forex market. There are numerous traders such as George Soros that have built vast fortunes by trading on the forex market.
A large percentage of all retail investors who starts trading forex end up losing money. Only about 10-20% of traders make money. The exact percentage of profitable traders varies between brokers. Most brokers disclose the percentage of profitable traders that use their platform.
If you want to make money as a forex trader, you need to be willing to work hard and dedicate yourself to learning enough about trading to become one of the successful traders.
Why is forex trading a good option for students?
Forex trading can be a good option for students. It offers several benefits over most other types of trading. The most important benefits of forex trading are:
- Accessibility: The forex market is open 24 hours a day. You will be able to trade from 5 p.m. EST on Sunday until 4 p.m. EST on Friday. This is perfect for students since you will be able to trade after school. You do not need to be able to trade during the day. You can spend your days in school and your evening and nights as a trader. This makes forex trading perfect for all the students who enjoy staying up late and sleeping in as long as possible.
- Liquidity: The foreign exchange market offers almost limitless liquidity. You will never have to worry about experiencing difficulties closing a position when you want to. This is especially true if you trade one of the major currency pairs such as USD/EUR or USD/GPB. Tens or even hundreds of billions are traded each An individual retail trader will never affect the market and will never experience problems executing a trade at market rates.
- Volatility: The forex market offers a lot of volatility. The value of the currencies is always fluctuating from one second to the Most fluctuations are small but that is enough for a skilled trader to be able to make money through leveraged transactions. This volatility makes the forex market an ideal place for any student who wants to make money as a day trader.
It should be mentioned that forex trading is high-risk trading and you risk losing all the money you deposit with a broker. Do not try forex trading if you cannot afford to lose the money you deposit.
How to get started trading forex
If you want to start trading forex you are going to need an account with a retail forex broker. There are a large number of different top brokers to choose from. You can read more about choosing a broker below. Once you have decided which broker and forex trading platform you want to use then you need to open an account with that broker. Doing so is easy and usually only takes a few minutes. You will need to deposit money into your account before you are able to start trading using real money. Most brokers offer a wide selection of different banking options that you can use to deposit money into your account. How long it takes before the money is available in your account depends on how you deposit your money. Some methods such as Visa, MasterCard and PayPal will allow you to have access to the money in your account almost instantly. Other methods such as wire transfers take a few days before you see the money in your account.
You do not need a lot of money to start trading forex. Some brokers allow you to start trading by deposing as little as USD $20. This is not ideal. USD $20 is not enough for you to be able to manage risk and you will have to rely on luck to make money. It is better to start trading using a slightly larger amount of money. USD $500 or $1000 is enough to allow you to start trading while at the same time being able to manage risk. More money will make it easier to make money and allow you to use lower leverage to reduce the risk you expose yourself to.
Many brokers will provide you with a free demo account that you can use to make virtual trades. This account will be available instantly after you have opened an account with the broker, and you can start making virtual trades to learn how the system works before you have deposited any money into your account.
How to find the best forex broker
It is tempting to ask yourself which is the best forex broker but the truth is that there are a number of different top brokers and none of them can be considered to be the best broker. Each trader has slightly different requirements that they want to see met. This means that different brokers will be the best broker for different people. You should not look for the best broker; you should look for the right broker for you — the broker that best meets your needs and trading goals.
As a beginner, you should generally be looking for an easy-to-use broker that offers good customer support. It is also important that the broker is regulated by a trustworthy regulatory body and that the broker has a good reputation in the market. There are a number of different brokers that fit these criteria. Examples of forex brokers that can be a good choice for a student who wants to start trading forex include IC markets, AvaTrade and eToro. It is recommended that you visit daytrading.com to find reliable broker reviews that will help you find top forex brokers for students.
Below you can read more about the things you should think about when choosing a forex broker with which to open an account.
How to compare forex brokers
There are a lot of things to consider when you compare forex brokers and decide which broker you want to use. Here are the most important things to consider.
- Regulation: It is very important to choose a broker that is regulated by a trusted regulatory body. Choosing a regulated broker guarantees that you will have recourse if you end up in a conflict with the Trading with a broker that is regulated by a trusted regulatory body also guarantees that the broker will keep your money separated from the company’s money and that they will not steal your money. All top brokers are regulated by one or several trusted regulatory bodies. Examples of trustworthy regulatory bodies include ESMA, FCA, CySec BaFin and FINMA.
- Cost of trading: The cost of trading is the second most important factor to consider when choosing a forex Low fees make it a lot easier to profit when trading. High fees can easily eat up the profit when you make a lot of trades that generate a small amount of profit each. You should choose a broker with low fees, low commissions, low spreads and no account fees.
- Customer support: A beginner should always look for a broker that offers good friendly customer service that is easily accessible during the hours the beginner intends to trade.
- Education: Does the broker provide information that can help you learn how to trade using their system? If they do, then this can speed up the learning If they do not, then there are countless third-party educational resources you can use instead. It is beneficial if the broker provides good educational material, but it is usually not a requirement for you to choose the broker.
- Dealing desk or no dealing desk brokers: Forex brokers operate according to one of two operating models. Dealing desk brokers are brokers that act as market makers and that take the opposite position of the client. There is no third party involved in the trade. A dealing desk broker profit when the trader loses money and lose money when the trader This creates a potential conflict of interest between the broker and the trader. A no-dealing desk broker, also known as an ECN broker, does not act as a market maker and does not take the opposite transaction to the trader. An ECN broker will instead connect the trader to a larger market where the order can be filled. All transactions with an ECN broker include a third party. An ECN broker earns the same regardless of whether the trader makes or loses money and there is no conflict of interest. ECN brokers earn more if the trader earns money and keeps trading. ECN brokers have an incentive to help traders become successful. An ECN broker is therefore often the better option.
- Reputation: The reputation of a broker can tell you a lot about how the broker treats their clients. Choose a broker that has a good reputation in the market. Please note that no broker has a 100% positive reputation. There are always unhappy traders that complain about any broker. Unhappy traders are usually a lot louder about their feelings than the thousand happy clients a broker might You should therefore choose a broker that has a mainly positive reputation but do not get scared if the broker has a small number of dissatisfied clients.
- Selection of assets: Different brokers offer access to different assets and different currency pairs. Some offer access to crypto while others do not. Chose a broker that offers access to the assets you want to trade with.
- Minimum deposit: Different brokers requires different minimum Choose a broker that requires a minimum deposit that you feel comfortable depositing.
- User-friendliness: Some brokers feature platforms that are easier to use for beginners than others. Chose a broker that you feel offers an intuitive interface.
- Platforms and tools: Different brokers provide access to different trading platforms and tools. Choose a broker that provides the tools you want to use.
- Demo account: A demo account is an account that allows you to make virtual The demo account can be used to learn how to trade and to try out new trading strategies. Beginners should always choose a broker that offers a free demo account.
- Deposit and withdraw: Different brokers allow you to deposit and withdraw money using different Chose a broker that offers banking methods that are convenient for you to use.
- Mobile trading: Do you want to be able to trade on the go? If you do then you should choose a broker that offers a good mobile app available for your If you do not intend to trade on your phone then you can ignore this.
How to become a successful trader
Traders such as George Soros, Paul Tudor Jones and Ref Wayne have built large fortunes by trading in the forex market. They prove that it is possible to earn a lot of money trading forex. However, their success does not mean that you are guaranteed to earn money if you start forex trading. Between 80-90% of all who try forex trading end up losing money. With this in mind, you have to ask yourself the question, how do I make sure that I become one of the 10-20% of all traders that make a profit?
The key to becoming a successful forex trader is to learn as much as possible about forex trading and to make sure that you always remain a disciplined trader. You should allow yourself time to learn as much as possible about the forex market, the different financial instruments that you can trade and different types of market analysis. You need to learn how to predict future market movements and how different events normally affect the exchange rates in the foreign exchange market. No one can predict the market 100% of the time but with study, you will be able to improve your accuracy significantly. Once you have learned to predict future market movements, it is important that you remain disciplined and only trade on strong predictions. Do not trade on weak predictions to chase profits. To do so is a recipe for losing money.
Another key to becoming a successful forex trader is to use the tools the broker provides you. The most important of these tools is the forex demo account. A demo account allows you to make virtual trades without risking any real money. The demo account is the perfect sandbox to trade in while you learn how to become a successful trader. It allows you to make trades and see how they turn out without risking any money. Keep using the demo account to make virtual trades until you have become skilled enough to consistently make a profit while trading on the forex market. The demo account is also a great tool to use to test out new trading strategies and see if they are viable.
Here’s to your good luck if you decide that you want to start forex trading.
