We’ve all heard the stories of people packing up their jobs because they made a fortune on the stock market. While buying and selling shares and other securities from the comfort of your own home sure sounds like a pretty cushy gig, but is making a living from it realistic? Here’s what you need to know.
How Trading Has Changed
In the past, the market was limited to large corporations and financial institutions, but in recent years investing has become available to essentially anyone with a debit card. The advent of the internet, and online brokers like ETX Capital, has fundamentally changed how the industry operates. Not only did this open the market up to more people than ever before, but the role of the internet itself cannot be underplayed. Rather than taking out financial literature in the local library or paying for expensive monthly subscriptions, you can now take advantage of this huge pool of information to do your own research, from your own home, in your own time.
Evaluating the Markets
With so many options available to you, finding the market that fits your tastes can be difficult. With around $4 trillion traded daily, forex is the largest liquid financial market in the world. Under normal circumstances, currency fluctuations are typically very small—typically less than 1% on a daily basis. This means that banks, large corporations, and private investment funds tend to dominate the market as they can make investments that are large enough to make the immediate returns worthwhile. As the number of participants in the single entity is so large, however, it isn’t possible for anyone to simply to corner the market.
Considering the Risks
Many experts advise against trading currencies, arguing that it is essentially no better than gambling. As with any investment, though, placing all of your money in one location is almost certainly a bad move. For investors looking to instead diversify their existing portfolios, forex remains a compelling option. Not only do many online brokers offer demo accounts so that you can get a feel of the market, but there are also no clearing fees, no government fees, or exchange fees once you decide to commit to a full account. Unlike stocks and commodities, forex also has a much narrower focus so any knowledge you’ve acquired in one market is easily applicable to the next.