The art of currency trading – five things to know to succeed – StartupSmart
It is a $4 trillion, 24-hour a day global market that was once reserved for big players, but now currency trading is finding its way into the startup and small business sphere.
No longer dominated by suit-wearing, loud-yelling, dealing and wheeling types on the trading floor, it has been embraced by all types of people thanks to its shift online.
Currency trading is now seen as a career option or supplement to other income, and people are trading from home in their own time, in their own choice of hours.
The trick is trading with the right guidance, expertise and sophisticated technology, as taking a stab at trading with no skill base can bring undesired results.
David Morgan, director of Australian-owned Business For Now, a company that offers training and mentoring in home currency trading, says people can fall into the trap of doing DIY currency trading research online, then thinking that they can plunge in and make a profit.
When they don’t, or lose money, they can get disheartened and give in.
“Home trading has been getting big for the last 15 years,” he says. “Lots of people have tried and failed at home trading if they investigate things themselves, or do DIY training online and they can get burnt and lose money.”
Morgan says with the right training, tools and mentoring, currency trading can be financially rewarding. He offers five things you need to know about becoming a currency trader with success.
1. What is currency trading?
With currency trading now done online and often in the comfort of people’s homes, Morgan says the vision of frantic traders yelling at each other is scarcely the reality.
Business For Now offers a technology platform and training that allows people to trade in their own time and space, and provides the skills people need to do it with confidence.
“I believe anyone can learn it,” he says. “You don’t need a university education for this – if you can read and write you can trade.”
Traders monitor the Australian dollar fluctuations before engaging in trades, and Morgan explains that just a fraction of a per cent of a rise or fall in the dollar can make a difference. Morgan says if a currency moves just 0.5 cents, with a $500 deposit, you could make $500 on that trade.
2. What do you trade?
People trade all sorts of things, such as precious metals, commodities and shares, but Morgan says the popularity of currency trading is due to the flexibility. People trade in currencies from all over the world.
He says you won’t make a profit on every trade, but you will make small losses on some, and bigger profits on others, with the goal to come out on top over many trades. “If the trade goes against you, the position will automatically be closed and any loss will be minimised,” he says.
3. How hard is trading?
Learning about the currency market, how to place trades and the terminology of trading are key to training. Morgan says watching other traders in action is an essential learning tool.
“Our process is to take the client through the modules online and over the phone. We have online presentations teaching them the terminology,” Morgan says.
Also key is setting up a business plan, to work out your investment and expected returns over a period of time.
Morgan puts his clients through a demonstration program for a few weeks, where they trade without real money. This shows what they need to improve before they set out for real.
He says trading terminology, such as ‘stocks’, ‘trends’, ‘stop losses’, and ‘limits’, is vital to learn, so people can navigate the market confidently.
4. How do you balance risk and wins?
Trading is not fool proof and there is an element of risk for return. Morgan says people who don’t get the right training and mentoring can make costly mistakes.
“It is about balancing the risks and the wins. You learn to risk less than the potential profit, this is called ‘risk reward’. You can risk one to make two, or risk one to make three,” he explains.
“You only risk a small amount of your trading capital at every trade.”
5. Can trading lead to work/life balance?
Currency trading can give people the flexibility to work when and for how long suits them, as the currency market is open 24 hours, five days a week.
“It is good for people who are semi-retired and for people with kids who need flexible working hours,” Morgan says.
He points to the cost efficiency of successful trading. People working for employers obtain the same pay each day, while with trading, as they increase in skill they can increase their returns without investing more time.
For more information on home trading and training, visit Business for Now at www.businessfornow.com.au