Financial Freedom Through Forex Trading
Everyone’s talking about Financial Freedom nowadays. The thought of having to work 8 to 5, 5 days a week doesn’t seem to attract many young people.
Everybody dreams about it, and there is no end to the number of online companies and people promising to sell you that dream. But in the back your mind, there’s a small nudge telling you that a dream is just a dream until you work for it.
How do you actually start? Well, firstly, you have to educate yourself, of course. When I say educate yourself, I don’t mean by clicking to annoying pop-up ads on your Facebook feed, consulting your friends driving those brand new BMWs or even consulting those wrinkly and stout so-called ‘financial advisors’. If there was such an easy way of get rich, why would anyone offer advice for $9.99 (or even for free)?
How Do You Achieve Financial Freedom?
Personally, for me, there are two ways to achieve financial freedom.
- You either save and invest your money or
- You start your own business.
Every other way of making money leaves you in a very dependent relationship with an employer and keeps you as an employee for God knows how long.
Starting a business requires considerable skill and time not to mention money. You must be willing to commit long hours, and often nights and weekends, for many years before you realize any kind of meaningful profit. An easier way is to just hitch a ride on someone else’s business. In other words, invest.
Investing might also require long hours, but you get the benefit of an existing infrastructure. You can get away with much less knowledge about a company you’re investing in than a company you’re managing. When you buy stock, you’re becoming part owner in a company. Your ownership is limited though. In effect, your stock ownership represents the fact that you’ve hired a manager to run the day to day operations of the business. This is why stockholders get voting rights and can collectively fire CEOs. Still, investing in a company usually requires that you understand something about the management, the economy, and the company’s supply chain so that you can try to predict whether it’s a good investment for you.
Meeting Your Financial Goals
Assuming that you want to achieve financial freedom through investing, you must set financial goals. How much money do you want to accumulate, and by when? If you want to retire by age 65, you have to assess your current savings and how much you’re putting away every month. If you need $50,000 a year in retirement, and you think you can earn 5 percent per year from your investments, then you’ll need a whopping $1,000,000 accumulated in your personal savings that you can adjust upward for inflation every year. If you try to use stocks to achieve this goal, you’ll have to invest for the long-term, and hope that the companies you invest in can return 8 to 10 percent every year for the duration of your retirement (to compensate you for inflation).
Another financial strategy to lower your risk and stabilize your income is to use forex for at least part of your income. Forex stands for “foreign exchange,” and the forex market is the largest, most liquid, and arguably the most volatile market in the world. It is estimated that the forex market has an average daily turnover of $4 trillion dollars. Buying and selling currency is extremely easy, and the volatility means that there is usually an opportunity to profit during a trading session.
You don’t have to use all of your savings to trade in forex. In fact, many individuals use just a small fraction (i.e. 5 percent or less) of their savings to invest in forex. Forex brokers help to facilitate your currency trades. Some examples of popular and reliable brokers includeFXPRIMUS, XM andInstaforex.
Along with brokers, there are plenty of software programs to help you track currency trends in the market. These programs will even tell you when you enter and exit a position in the market, making trading very easy. The balance of your savings can then be invested in bonds, money market funds, bank CDs, annuities or some other interest-bearing investment.
I wrote an article on what I think are the best Forex Brokers out there. Read it if you have the time.
While trading forex is easy, making money is not. Even with software programs that point out trends, entry, and exit points, you must set firm profit targets for daily trades. For example, if your daily profit target is $100, then stop once you’ve made $100. Don’t try to make more. If you set a loss target of $100, then stick to that too. Don’t try to go for “revenge” on the market.
The market doesn’t care how much you make or lose. In fact, one of the benefits of using trading software in forex is that it takes emotion out of the equation. Once you start trading emotionally, you risk losing more than you can afford to.
Hope this helps.