Someone recently asked me if forex trading was a good investment for a beginner.
In clearer terms, will forex trading be a good way to start making money online for someone who is just starting out?
Well, my answer to that is, it depends.
Forex trading seems to be one of the most proposed investment opportunities for beginners looking to make money digitally.
And you could make good money from it if you know your onions, but it isn’t as easy as people make it to be.
Experts and forex trading advocates could easily make newbies excited, as they whip out screenshots of green candlestick charts making money from thin air.
Making it seem like you only have to work a few hours a day to earn a huge payday and a fancy holiday in Ibiza.
Well, before thinking of going all in on forex trading, it might be a wise choice to hold up a little and think through the decision of putting money where your mouth isn’t.
The Learning Curve
The first thing most beginners do not realize is that there is a learning curve when it comes to making money with forex trading.
You don’t read a few blogs on Google and then become a profitable forex trader who makes shit load of money.
Rather, you’ll have to grind, learn, fail, even lose money and get frustrated, before you become the profit guru that everyone admires.
So, you have to think first. Do you have the required time to go through the learning curve?
Do you have the time to invest in your forex trading education first? Or you just want to make money?
Passive or Active Income
What kind of income are you really looking for?
Not all kinds of investment opportunities will match your money and your time.
If you’re a busy 9-to-5 employee or business executive, how do you intend to find the time to trade forex?
Remember that forex trading has a limited weekly and daily trading window, which may likely clash with your work hours.
So, how do you intend to navigate that?
If you just want to put money somewhere and get it working for you, then forex trading may not be the ideal financial vehicle.
Building Your Financial Trading Skills
The truth is, if you’ll ever make any money from trading forex, you’ll have to go deeper than you really want to.
You’ll have to become dedicated to building your financial trading skills, which might take years to hone.
In my experience, the majority of people who make the most money from forex trading are those who intentionally make a career off of it.
They are not just looking to put in a few quids to make a quick profit off forex trades.
Rather, they spend hours practicing, making mistakes, taking risks, and fine-tuning their financial trading skills.
They don’t just want to become profitable, they want to become forex professionals, and they get paid handsomely for it.
As much as I may want to sugarcoat it, forex trading is a risky investment venture.
Your entire investment could be effectively wiped out in just one trade, and you could lose even more money the more you get emotionally invested.
The truth is that a lot of beginners trade forex like a game of gamble. They throw in some money while hoping and praying that the carousel favors them.
Most likely than not, it doesn’t and they get their fingers burnt.
So, you have to consider if you have any tolerance for risk in the first place before putting your money into forex trading.
Are you intrigued by risk taking or you’re averse to it? Do you have the right temperament to manage risk? Or you lack impulse control?
Do you want to keep your capital as safe as it can get while getting some ROI for it? Or are you willing to risk your portfolio for a chance at making a fortune?
Know your risk Tolerance, and you’ll be able to ascertain if forex trading is for you.
Conclusively, it depends on you.
The investment vehicle you choose would depend on your personality and your financial goals.
If you have the time, patience and temperament to hone your skills in forex trading, then it could be a very lucrative career for you.
However, if you’re a passive income monger or someone who likes being in control of their portfolio, then forex trading might just be too volatile for you.
Whichever way you go, remember that the primary goal of a smart beginner investor is to preserve their capital while looking to make profit.