The Forex market is the world’s largest online trading marketplace. According to statistics, it accounts for more than $5 trillion worth of daily transactions. Yet, the same stats also show that more than 65% of traders net losses. For instance, a 2014 report published by Bloomberg indicated that 68% of FXCM and Gain Capital clients netted losses in four consecutive quarters leading to the publication of the report.
These figures are conservative given that these two brokers attract most of the best traders in the market. Statistically, traders that use brokers which allow excessive leveraging tend to net higher losses, according to a report by Investopedia.
The digital transformation of the global financial markets has made it easier for the Forex market to grow rapidly, but some traders tend to jump in aimlessly. The market has also attracted different types of traders including those with experience in trading options, commodities, and stocks, as well as, novice traders who had no prior experience trading online.
However, for such inexperienced traders, they need not worry much because the Forex market has also attracted disruptive startups that provide auxiliary services like automated trading systems and signals that can enhance the profit potential for new traders.
Potential avenues that beginner traders can use to make money in forex
- Try a verified forex trading signals provider: Forex trading signals are simply trading tips, but with more details than just a trade recommendation to trade a given currency pair. Expert trading signals providers provide signals that have a specific time frame within which a trader must execute, otherwise, after that time passes, they expire.
- Try copy trading: While eToro is the most reputable social trading platform, many providers have cropped up to provide competition in copy trading services. Generally, copy trading encompasses copying the trades of expert traders for a given period by automatically matching every action they take. Platforms like eToro provide details of the success rates of each expert trader that others can follow.
- Try using an automated trading system: Advances in technology have made it possible for software developers to come up with tools that can help traders to improve on the accuracy of their trade picks. These tools use technical indicators and customized algorithms to try to predict how a given currency pair will move in the foreseeable future. Recent developments have also made it possible for system developers to utilize intuitive technologies like artificial intelligence and machine learning concepts to pick trades more accurately and quicker.
- Enlist the services of an account manager: If you feel that you are not competent enough to trade by yourself. There is always the option of getting someone to trade on your behalf. Forex account management is one of the hottest targets for traders that consider themselves to be experts. They provide these services at a fee, which can make things a little tricky, unless they prove their worth. As a beginner trader, you can choose to have your funds managed together with investments of others in a pool, or you can choose to enlist the services of a separately managed forex account, where your funds are managed separately.
- Take the long road: This is supposed to be the route that bears all the ups and downs. You will need to start by learning the basics of online trading, getting acquainted with all the complex terminologies and hardware and software requirements depending on your intended initial capital outlay. Most expert traders also recommend trying virtual trading via a forex simulator before deciding to use real currency. From this stage onwards, traders can experiment with different trading strategies, and asset types to determine which resonate with their investment goals better. This is the long and testing option, which some traders choose, but fail to follow properly. It is also the most reliable for long-term success.
So, do you need to be an expert to make money in Forex?
Clearly, as discussed briefly by highlighting these 5 potential avenues to success, you do not really need to be an expert to make money in forex. Signal services, managed accounts, copy trading and intuitive automated trading systems have made it simpler for beginner traders to make money in forex.
However, there is a catch.
First, should you decide to use third party services like trading signals or managed accounts, you must make sure that the service you choose is not a scam disguised to reap you off your hard-earned money, or even steal critical information from you.
Second, the trading signal service or managed accounts services provider should be well vetted to see whether they have proof of results and an indisputable track record, which can be verified.
Third, if available, try out a free trial package before signing up for a premium package. This way, you’ve got nothing to lose.
In summary, the Forex market provides traders with short-term and long-term trading opportunities. It’s one of the most easily accessible markets in online trading and provides unmatched levels of liquidity.
And to make things more interesting, traders now do not necessarily require trading experience to make money in the market because there are plenty of trading tools and service providers that can provide the bridge to success. To prosper, you must invest wisely.
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