Summary:
Forex trading may be a good option to consider if you are looking for a new income stream to increase your cash flow and don’t have a great deal of extra time.
Increasing your cash flow is critical when you are striving to get ahead. There are many ways to do this, including getting a second job, or starting a part time business. But what if you simply don’t have time for this?
There are many potential avenues for adding to your income stream and there is not a one size fits all approach. One possible strategy is trading the markets. The skill set and amount of time that you will be required to dedicate to this endeavour will vary depending on the trading instrument(s) and particular market you are involved in. Some types of trading (e.g. day-trading) require you to invest a considerable amount of your time glued to a screen each day.
The beauty of trading Forex is that the markets are open 24 hours a day, 5 days a week on the retail level, so you can trade around your schedule. The markets are also highly liquid, allowing you to change positions quickly and easily.
Using the strategy of “position trading”, where you enter a trade that you are intending to last days, weeks or maybe even for a few months, you will be able to manage your trades by dedicating just an hour or two a week monitoring and adjusting your positions, freeing you up for other things you want and need to accomplish.
It’s important to note that you will require a specialized skill set to be successful in this type of trading, so be sure to first research the field and hone your skills thorough practice before you jump in. There are many online resources available for this. You will also require a minimum of $5000 to open a trading account.
Currency trading isn’t for everyone, and it is important to first research the subject thoroughly before deciding if it is the right vehicle for you to start increasing your cash flow. It is just one of many options out there. Whatever you choose, always continue to explore and look for new ways to increase your cash flow so that you too can Live Rich!
Transcript:
I talked about the importance of cash flow in a previous article called Cash Flow is King.
One of the questions I get asked most often is: “If there was one bit of advice you could give me toward getting ahead, what would it be?” My answer is mostly about the need for excess cash flow and how without it, getting ahead is virtually impossible.
Then I often get the follow-up question: “How can I increase my cash flow when I don’t have time to get another job and I don’t have time to start a business? Between my family, my job and commuting, I am running from the moment I wake up until the moment I go to bed.”
Of course there is not a one-size fits all answer and what I am going to talk about isn’t for everyone, but it is one potential avenue to generate extra cash flow.
Trading Forex in Your Spare Time
I started trading currencies or Forex as it is called, over ten years ago when I was looking for another project to take on that would be interesting and provide me with additional cash flow. As I have said previously, cash flow is king when it comes to getting ahead and even though I am fairly well off by many people’s standards, I am always interested in learning something new, taking on new challenges and earning additional cash flow at the same time.
In the last year I have earned over $150,000.00 trading currencies about one hour each week. This is a screen shot of my computer which shows four of my actual recent live trades, in my real trading account. The green numbers in the black boxes are the current profits on each of the current trades.
So when someone tells me they don’t have time to earn extra money, I ask them if they can spend one hour a week to earn some extra cash flow money?
Getting Started
Now you don’t just open an account and start trading currencies. You need a little money for one thing, although many companies allow you to start with as little as $5,000. Now you will NOT make $150,000 in a year with a $5,000 account. However, some very good traders that a friend of mine instructs are making 10% per month. So IF you could get that good, on a $5,000 account, you would be earning $500 per month. Then start to compound that and you can see the numbers grow quite quickly and you can start to earn some significant cash flow.
Acquire the Skill Set
You will require the skill set to do this. You need to get some quality trading lessons. These days, everything you need to know you can learn for free online via different resources. Many of the brokerage houses offer a great deal of quality free training. I say quality, because you must be aware that there are a lot of scammers out there who just want to sell you expensive courses. When I first got started I took some courses and while learned a lot, the information I received wasn’t available for free back then.
I also got two different personal mentoring coaches at two different times to work directly with me and help me figure out what the best way was for me to trade.
I started out with a $20,000.00 dollar account to learn. The amount was not so big that it would hurt if I lost some or all of it. However, even though I had learned the technical aspects of trading, there was something missing; an understanding of myself, of the type of trader I am. I got cocky after a few wins, over-leveraged and didn’t use “stop loses.” I blew out the account. I lost every penny. It was an expensive yet valuable lesson.
Had I used proper risk management, I could have made very significant gains over the next several months because I was right on my direction, but it was my timing that was wrong at that moment.
Advantages of Trading Forex
I have traded and speculated in stocks, options, commodity futures and also Forex. From a cash flow perspective, today I mainly stick with Forex and Options, but I will leave the discussion of Options for another article. Neither of these takes me more than about one hour a week and usually less. I love Forex for a number of reasons. First, it is open 24 hours a day, five days a week on the “retail” level. This allows you to set the times that are best for you to trade and examine the markets.
If you are a shift worker, you may like to trade at midnight or one o’clock in the morning. You can do that because the London market is open while most people in North America are sleeping.
Also, the forex markets are very liquid, most of the time. This allows you in and out of a trade anytime you want with very small “spreads.” (The spread is the difference between the asking price of the buy and sell) At more than $5.3 trillion dollars a day, they are also by far the largest of any markets in the world. This helps decrease the possibility of manipulation. That said, I am not saying there is no manipulation. Any time governments have their fingers in the pie there is likely manipulation.
Know Your “Trader-Self”
The number one most important aspect of trading and investing in any of these markets is “knowing yourself.” As I said earlier, I didn’t know my trader-self when I was getting started. Knowing yourself as a trader is even more important than understanding “support and resistance” or “trend lines.”
I’ve day-traded each of these markets using charts with time frames as small as one minute. I have swing-traded as well, which is getting into positions that you expect to be in for a few days or so.
When I was just getting started and learning the in’s and out’s of trading, and specifically of Forex, I thought “day-trading” was the way to go. With day-trading you enter and exit a trade on the same day, that way you don’t have positions working over night when you are not there to watch them. For me, I found day-trading to be overly tedious and boring. Day-trading required that I be doing something all the time. This either led to me getting off track and not watching the screens or entering a trade because I thought I had to. Even the name, day-trading, said to me that I must do something every day. This was not what I was interested in.
So given the amount of time I was prepared to spend in front of the screens and my personal ability to remain interested and not get bored, I decided I would do something called “position-trading.” This is where you enter a trade that you are intending to last days, weeks or maybe even for a few months.
So to give you an idea of what this is, without getting into a complete Forex training session, I will tell you that I follow a simple plan. I follow the major trends of the currency pair I am interested in trading. I decide by looking mainly at where the support or resistance is and either take a long or short position. I enter my stop and let the position run its course. I will look at the position once or twice a day for one to three minutes and assess the other positions I have or want to get into. If necessary, I adjust my stop price to lock in a profit and repeat the next day.
That’s it. So in one hour or less per week I can make some decent money and that allows me to do the other things I really enjoy. Like doing the articles I do and helping other people attain their goals and dreams. I find that much more exhilarating than sitting in front of a computer screen.
From a time efficiency stand point, I have found something that works for me and that I can do well enough that it makes sense to do regularly.
Research and Practice
I don’t know whether currency trading is right for you or not. Only you can decide and you should research it more if you really are interested. But like with many new things we take on, you must take the time to acquire the skills needed. In this case, practice trading with a free account and imaginary money first. You can get one at several of the brokerages. Just be careful that you get more than thirty days to try it out. It will take you longer than thirty days to figure out trading, especially if you have no background to start with and you are only spending a few hours a week to learn the craft.
Also, don’t stop practicing with imaginary money until you have a developed a specific plan of action around how and when you are going to trade and you have had an excellent track record. And here’s a bit of advice from one of the top traders I know: “Be prepared to have ten trades go against you at some point, because it will happen.” No matter what your preparation, you must be ready for that time.
And as I said, you need at least $5,000 to start.
There are of course many other ways to earn extra cash flow and I outline twenty five of them in my course, Retire Rich. Many of them require no money to get started. You can receive more details by clicking here. However there is one certainty: you will need to figure out the best way for you to earn extra cash flow if you are going to get ahead.
Please leave your comments below and be sure to check out the many other topics I have covered. And always, Live Rich!
