Who says we cannot make money with no sweat? If you are currently looking for a modern investment that is both convenient and profitable, you should consider trading in the foreign exchange market.
Forex or currency trading is buying and selling currencies simultaneously. Basically, you sell your own money to buy different currencies, and in the process, gain a profit from the Forex market.
Forex market retains the highest number of participants due to its unprecedented potential for profit-making as well as high liquidity. Forex is free, decentralized, and accessible 24/7 via various forex brokers; besides, it offers higher leverage and more reasonable costs compared to other markets. The Forex market allows you to trade easily regardless of your location and time.
Technical and fundamental analyses can help you get a better grip on strategies.
Technical analysis is the study of currency price movements. It allows you to study the past movements of currency prices to understand the pattern. In technical analysis, traders often use charts to find similar patterns in the past price movements, believing that the patterns will repeat the same way in the future.
Fundamental Analysis, alternatively, works in a bigger and wider scope where traders study the economic, political, and social aspects of the influential countries. Traders who use this method believe that although the price movements can temporarily deviate but ultimately return to the true values.
Your annual income in trading Forex is in direct correlation with your trading strategy, capability, and capacity for risks.
The listed factors below could help you calculate and predict how much you can earn annually.
1. Trading Quality and Frequency
Most traders believe that they need to trade as frequently as possible to gain more revenue. You can earn more money by trading frequently and aiming for even the slightest profits possible. This is commonly known as the scalping technique.
You can also trade less frequently and instead monitor the market movements further and focus on your trading quality. You may earn money less frequently but usually in larger amounts.
2. Capital Amount or Account Size
The more money you invest in your account, the more profit you can gain. No matter what strategies you use, low capital means low returns and vice versa.
Let's say you can get a 15% monthly profit on average. So, with a 1,000 USD capital, you can obtain a 150 USD monthly return. And if you invest more capital, say 100,000 USD, your monthly return will be higher as well, (in this case 15,000 USD in a month).
3. Trade Size Amount
In trading Forex, the amount of your trade size also affects how much money you can get. However, larger trade sizes result in higher risks. If poorly managed, there is a huge chance that your trades will result in losses.
4. Compounding Trade Returns
You can always earn more money by adding your returns to your capital. This way, the money you use as capital in your account will increase, resulting in higher returns.
Let's say you have $10,000 in your account with an average 15% monthly return. You choose to keep all your profits in your account, and this will lead to an average return of $1,500 in the first month, $1,725 in the second month, $1,980 in the third month, and so on.