Is Currency Day Trading A Good Side Income Activity?

(MENAFN- Kashmir Observer)
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If you want to have some extra income, you might be wondering whether currency day trading is a viable side hustle. To answer this question, it is important to have objective data such as statistics, risks involved, and realities of day trading.

Currency day trading is an attractive career choice for many retail investors as these markets are open 24/5 and provide a unique opportunity to generate income even with a small budget. However, without proper knowledge and practice, it can be a risky endeavor. Let's analyze the topic and answer the following question: Can currency day trading generate a reliable side income?

Why currency day trading is so attractive

There are certain advantages of currency day trading such as low entry barriers, leverage opportunities, and high potential returns.

Accessibility

Forex markets are most liquid, meaning you can instantly buy and sell a currency pair, especially major pairs. There are trillions of dollars traded daily, and it is open 24/5, meaning no matter a trader's location, the FX market is always active.

Most brokers in the sector offer low minimum deposit requirements and provide useful FX day trading guide s explaining how to start trading from zero, which is very useful. Traders can start F trading even with below 100 dollars, which is possible with the leverage provided by the brokers. The leverage enables traders to trade with large positions. Here is how the leverage in FX works: if the broker offers 1:100 leverage, with just 100 USD, traders can control 100 x 100 = 10,000 or 0.1 lots, which is a serious amount.

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In Forex, traders can also use technical indicators and most brokers provide advanced trading platforms for free with built-in indicators and analysis tools enabling traders to analyze markets and trade from within one platform. With modern AI-powered tools, traders can further increase their trading accuracy and analyze their performance for greater insights.

The hard truth – statistical realities

Despite having advanced tools and low entry barriers, not many traders make it to profitable trading. Around 40% of traders quit within a month, and 97% of them lose money. This statistic is different for each broker and asset, but with more than 75% of retail traders losing money, it is clear that Forex day trading is not a simple career path. Trading requires discipline, and just like champion sportsmen, traders too need to be very disciplined and consistent in their trading. Applying only a scientific approach and doing trading journals and self-assessment is key, which is not a strong side for most traders.

Trading is all about psychology, where behavioral challenges are most difficult to master and overcome. Cognitive biases such as overconfidence and survivorship are serious challenges that require a disciplined approach to counter.

Despite challenges, many retail traders achieve success and make lots of money in trading.

Strategies to mitigate risks and challenges

The number one reason why most traders fail is the lack of proper education. Many retail traders forget that Forex currency day trading is just like any other profession, and it requires proper education and practice. Since most brokers offer demo accounts, traders can also apply their education in practice using virtual money on a demo account to develop strategies and master practical trading skills. Traders should learn not only about important terms and core concepts in trading but also technical and fundamental analysis, coupled with strong risk management methods. Risk management allows traders to stay in the game for the long run, and using stop-loss orders and proper position sizes can save you from blowing up an account.

There are many cases of successful currency traders who have managed to make millions and billions of dollars and are still icons. Traders like George Soros used their technical and fundamental analysis and were methodical in their trading which enabled them to become all-time bests.

The bottom line

Forex day trading provides a thrilling and attractive way to make money and become successful, but depending on your discipline, it might become a challenge. While most traders fail to become profitable, there are retail traders who have achieved huge success. To be among the 1% of Forex successful traders, traders should start with solid education, then apply this knowledge in practice using the demo account and master risk management skills.

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