Financial independence through Forex – is it possible??
Although the average earnings in Poland are still lower than in Germany or Great Britain, we are still earning more and thus saving more. It’s no wonder that we are looking for ways to multiply the money we save, to build our financial independence and we want our funds to work for themselves.
On the web you can find a lot of information on how to save wisely, build your own financial cushion, or finally invest. The economic awareness of Poles is growing, the times of storing money in the proverbial mattress are long gone. Many of us are aware that savings accounts and bank deposits only offer a small degree of protection against inflation, let alone a meaningful return.
Fortunately, thanks to widespread access to the Internet, and thus to many markets, we can try many different ways of investing and earning additional income. In the network there are many brokers, such as. NSBroker, having access to a wide range of financial assets in which you can invest your capital. The advantage of brokers is the ease of making transactions through them and the speed of service. But what to invest in to gain complete financial independence?
What is Forex?
One of the most popular financial instruments next to stocks, commodities or precious metals are currencies. It can be traded on the Forex market. It is a currency exchange market that operates 24 hours a day, where transactions are carried out to buy and sell currencies. We have a lot of money in our pockets, both from governments, multinational corporations, central banks and institutional investors. Nowadays, thanks to such services of brokers, also individual clients have access to FX.
Forex is decentralized, it means that there is no physical office, and the trading takes place through the Internet network. At the same time, it is the largest market in the world, where transactions of more than 5 trillion dollars are processed daily.
How much can you earn by investing in Forex?
The answer to this question will probably not satisfy those who would like to base their finances completely on Forex, because it is – it depends on. On what? It depends on many elements, starting with your own contribution, the strategy adopted, the method of investment and finally one of the most important factors that none of us can influence – external conditions and the global economy. As 2020 has shown, these can be truly unpredictable.
In the Forex market, income is determined in percentage terms, and the biggest influence on the amount of earnings, of course, the decisions made by the trader. The highest profits can be expected by those who base their actions on market analysis and have knowledge about currency trading, and at the same time have a lot of resources at their disposal.
A good result is considered to be a return of 2-5%, realistic to achieve when using a conservative strategy. It allows to achieve decent results with the least risk, which of course does not mean that there is no risk at all. Using a moderate strategy you can count on profits up to 15%, and with aggressive trading over 15%.
Each investment is associated with the possibility of loss of funds, so before starting the adventure with the stock market or the Forex market, it is necessary to analyze your financial situation and reasonably assess it.
Can you achieve financial independence with Forex??
As you already know, it’s impossible to accurately predict the results on the Forex market. Depending on the adopted tactics, these may range from one to a dozen or so percent, although it happens that traders’ profits in some months reach up to 40%. However, such high revenues are mostly the result of experience supported by solid analysis, and high risk. If you are not careful and knowledgeable, you can lose a huge amount of money investing in this way.
If, after several weeks of successful streak in FX, you are thinking of quitting, think whether you will be able to stay liquid even if you fail. The Forex market is a great source of additional income, but completely relying on it for your finances can involve a lot of stress and instability. A better solution is to diversify your investment portfolio and place funds in different instruments. It is worth mentioning that most brokers offer multiple assets, so you do not need to use separate services or platforms to order trades. NSBroker offers its clients to invest in energy, precious metals, currencies and cryptocurrencies, and all you need to perform operations is a phone or a laptop with Internet access.
For those who are just figuring out how to allocate the money they have saved, there are demo accounts, or practice accounts, available. These are free accounts that allow you to make fictitious trades with virtual cash based on real prices. In this way, you learn how Forex and other markets work, and thus better understand the specifics of investing. It is also a chance to test one’s own strategies in a safe environment, without the risk of losing one’s funds.
How to increase your earnings on Forex?
Brokers provide a number of tools with which you can multiply your income and limit the risk of losses. One of the mechanisms that allow you to achieve higher profits is leverage, sometimes also called leverage. Using it, the trader can use for transactions a larger amount of money than he currently has on his account. The maximum leverage in Europe for major currency pairs is 1:30, while NSBroker offers its clients leverage as high as 1:200. This means that a trader with 1000 PLN on his account can use leverage and have at his disposal capital 100 times bigger, that is 100 000 PLN.
Another solution offered by brokers is the system Stop Loss, which sells the position before it reaches a predefined minimum value and thus protects against excessive loss. Margin Call is a system of notification of low account balance, calling the investor to replenish the funds. When Margin Call is active, you can not order new operations. If the level of funds on the account falls even lower, the mechanism will be triggered Stop-Out, and all positions will be closed automatically.
As you can see, there are several currency trading strategies and brokers provide practical solutions to protect against loss of capital. Many specialists point out, however, that building your financial independence based on FX is a process that takes months or even years, and the most important thing is patience. They compare investing to a marathon rather than a sprint and emphasize the importance of skill and experience. They encourage you to continue learning and improving your skills, which will certainly translate into results, as well as diversify your sources of income and develop a financial cushion in case of unforeseen circumstances. You also need to remember that trading this way involves the possibility of losing all your capital.