How to Use Currency Trading as a Second Pillar of Income

It´s wonderful if your business is thriving, and even better if it keeps on growing. But it´s always smart to find yourself a second mainstay. That doesn’t mean you should open a second business. There are other ways to generate new sources of income.

More and more people decide to better their income by trading stock values like shares, cryptocurrencies, resources, or foreign currencies. With the right strategy, trading can become a great way to help your private capital grow and to provide for your future.

Forex Trading

Forex is short for foreign exchange and refers to trading currencies. Depending on what your goals are, you should elaborate on particular trading styles and strategies. But the key to successful trading is your choice of broker. This list of forex brokers gives you a great overview of the best platforms for currency trading on the internet and gives you insights in what to look for in a good broker:

While good service and legit handling are essential, you should also pay attention to the costs and fees. Depending on how active you are planning to be as a trader you should find a forex broker with a flat-rate fee on transactions or one with progressive fees, which grow in relation to your order volume.

Different Types of Forex Trading

A forex broker can act as a mere exchange bureau, where you can pay the money equivalent to the amount of foreign currency you would like to have at your disposal. You can use that money for traveling or keep it in your portfolio for future resales. Exchanging one currency for another is the easiest and most flexible way of forex trading. Currencies are always traded in pairs. The exchange market value of one currency is therefore always priced in its relation to another.

Foreign Exchange Derivate

Derivatives are a way of investing in foreign currencies without actually having to buy foreign currencies. Instead, the investor makes a prediction on how the two currencies in question will perform at a certain point in time. Forex derivatives are a popular way of international monetary speculation.

Binary Options

This type of exotic option is also often referred to as an all-or-nothing option because there are only two possible outcomes of the contract: Either the investor was right about his prediction and receives money. Or he was wrong and the option goes valueless. Binary options are risky, but experienced traders can make a lot of money with them.

The Right Trading Strategy for Your Second Mainstay

Generating an additional source of income can be quite time-consuming. Of course, you will also have to invest time when trading at the forex market. But the good thing about modern-day trading is that investors are independent of banks and their opening hours. Depending on how much time a prospective trader can invest, there are different trading strategies that are possible. Your budget, too, can be an indicator of which strategy to follow. It is better and safer to separate business from private capital, though.

Hold-and-Buy

Just like with shares, there’s a hold-and-buy strategy at the forex market. Hold-and-buy isn´t time-consuming, which is nice. But it won’t pay off until after quite some time.

Day Trading

Day trading is a very efficient way to take advantage of the high volatility of the exchange market values. Most values fluctuate throughout the day. These small fluctuations can even be more or less independent from the trend itself, which means that investors have a broad variety of potential stocks, cryptocurrencies, or currencies.

If you start trading only a handful of positions each day, you can keep the time requirement relatively low. For some investors, trading has even become a welcome pastime. Some traders only keep their exchange values for minutes or even seconds before they resell them. This strategy is called scalping. If your strategy varies depending on a certain trade value, it’s called swing trading.

Dragan Sutevski

Posted by Dragan Sutevski

Dragan Sutevski is a founder and CEO of Sutevski Consulting, creating business excellence through innovative thinking. Get more from Dragan on Twitter. Contact Dragan