How To Make Money From Home: Forex Trading

What Is Forex Trading?

Forex is short for foreign exchange. Thus, forex trading is the buying and selling of different currencies to take advantage of the fluctuations in exchange rates between those different currencies.

There are dozens of currencies from countries all over the world like the U. S. dollar, the Euro, the Japanese Yen, the Chinese Yuan etc. Each of these currencies has a conversion value in another currency, for example 1 Euro is worth 1.30 U. S. Dollars.

However, this conversion value fluctuates all the time depending on various factors ranging from economic output of the country to political actions to global events like natural disasters, wars or disease.

As a forex trader you research and analyze various currencies to determine a profitable price level to buy and sell, aiming to take advantage of these conversion value fluctuations. Going back to the example of 1 Euro being equal to 1.30 U. S. Dollars, if you were to buy Euro’s at this price and the conversion value goes up to 1 Euro being equal to 1.40 U. S. Dollars, then you make money.

So far so good?

Okay, so now you may be wondering how on earth you could analyze currencies and determine profitable price levels to buy and sell? Especially if you have no knowledge, qualifications or experience with economics or forex.

Don’t worry. You don’t need to have any knowledge, qualifications or experience with economics or forex to become a profitable forex trader. All you need is an open mind and the desire to learn.

Thousands of forex traders all around the world (myself included) trade the forex markets based on a principle called Technical Analysis. Technical analysis is the term given to the study of the price action of markets, in this case the forex markets.

I mentioned the constant fluctuations of currencies earlier. These fluctuations get recorded by the split second, every single day of the year. As a forex trader you have access to all the data of the fluctuations of currencies, going back as far as 30 years ago.

Through your forex trading software, you’re able to pull this data up into various types of charts of all time-frames. For example, you’re able to take the data and put it into a chart that’s updated by the minute, or a chart that’s updated by the hour, day, week or even month.

Technical analysis is based on rules, indicators and patterns that have high probability outcomes, meaning that when a certain setup appears on your chart, it’s very likely (70%+ of the time) that the value of a currency will move in a certain direction (up or down).

In other words, you don’t need to be able to predict the future to make money from home trading forex, all you need to do is be able to recognize high-probability patterns and setups and buy or sell based on that. If on top of that you only risk 5% of your trading account on a single trade, there’s no doubt that you’ll be able to make great money from home as a forex trader.

If you’re interested in forex trading after what you’ve read so far, you can read more in these tutorials I’ve written:

Pros Of Forex Trading

I personally love forex trading as a way how to make money from home and here are the reasons why:

1- Just like with an online business, forex trading allows you to work without a boss or employees. You make all your own decisions and you do all your own analysis.

2- Forex trading allows you to work from anywhere with a computer and internet access. This means you can work at any hour you choose, whether it be midday or midnight, a normal Monday or on Christmas day. The forex markets are only open 5 days per week which allows you to have a normal weekend without stress or needing to work.

3- Forex trading is based on a system. It’s about patterns, rules and setups. This means that there is no luck involved and that you can follow a system that will get you results time after time. No guessing and no trial-and-error.

4- With forex trading you have unlimited earning potential. Unlike a job that pays a fixed monthly salary, when you make money from home as a forex trader you are in control of your own paycheck, depending on how well you trade and how much time you put in. This allows the potential of building your trading account up to tens of thousands of dollars within a matter of months.

5- It’s challenging and fun. Personally I love the challenge of trying to profit from the forex markets and using my brain to earn my money.

Cons Of Forex Trading

There are unfortunately a few downsides if you want to make money from home trading forex.

1- Your money is always at risk. You will have losing trades and sometimes you’ll have periods where you only lose money. This is not a problem if you have strict rules about how much money you risk per trade, but the emotional aspect of losing money is not something that everyone can handle.

2- As I said above, losing money is not a problem if you have strict rules of how much you risk per trade (I suggest no more than 5% of your account per trade). However, this means that you need to be very disciplined to stick to those risk rules at all times, otherwise you’ll end up losing a lot of money and you won’t be a profitable forex trader over the long run.

If you feel you can handle losing money as part of being a profitable forex trader and if you feel you’re disciplined enough to stick to your own rules at all times, then forex trading can be a fantastic way for you how to make money from home.

Do You Want To Make Money From Home Trading Forex?

Getting started with forex trading is very easy.

First you need to learn technical analysis and I highly recommend these two books: