If you are a caregiver of any sort, from being a full-time stay-at-home parent, a working parent, or a guardian, you may have limited time to juggle all your responsibilities. You may be thinking that trading is not for you, because you do not picture yourself as someone in a suit and a briefcase. However, the good news is that traders these days come in all forms, and there are a great number of retail traders that populate the market from all walks of life.
If you are looking to get a firmer hold on your finances, financial literacy is important. Some people may also opt to get into trading, which can potentially help you bolster your existing income after learning the ropes of the financial market. Today, we will talk about how you can get started in forex trading as a caregiver, guardian, or parent.
Before we begin, it goes without saying that all forms of trading contain risk and there is no such thing as guaranteed profit. Therefore, it is crucial to trade with caution and sensibly.
1. Learn the terminology
The first thing you must do if you are a new trader is to learn the terminology. You can find plenty of resources on forex trading and the forex market anywhere on the Internet these days. Be discerning about your sources and choose reputable ones.
Know that currency trading is done in pairs, and they appear like this: AUD/USD. AUD stands for Australian dollar and USD stands for United States dollar. If you buy AUD/USD, you are buying AUD and selling USD. If you sell AUD/USD, you are buying USD and selling AUD.
The spread is the price difference between the asking price and the offer price. In forex trading, you always aim for tight spreads, so you put down less money to make the trade. You may also hear about leverage, which is when you borrow money from your broker to increase your position size in the market. You can earn substantially more money if your speculations are right and you use leverage. However, it is a tool that works both ways – if you lose money, you will also incur a much bigger loss.
Next, know that in forex, currency prices move by pips. One pip is 0.0001, but in the case of currency pairs with JPY, one pip is 0.01. Knowing this makes a big difference because it is part of how you will calculate your potential gains.
The faster you can learn the related terminology, the faster you can begin trading. However, do not rush into it. You should at least have a reasonable working understanding of how trading works before participating in the market with a live account.
2. Practice with a demo account
Luckily, there is a buffer between a complete beginner and those using a live account. This buffer comes in the form of a demo account.
A demo account is an account that many brokers provide, and it allows you to trade in close-to-real environments with simulated funds. Using one will help you to get the hang of trading, and the feel of the platform, and it will help you improve.
You can open your demo account with any forex broker. Make sure the broker offers the instrument you want to trade, and they are charging reasonable fees. This way, when you become familiar with the use of their platform, you can make the switch to a live account.
3. Study up on strategies
One important thing you should have under your belt when you begin trading is basic knowledge of market charts. This means understanding how to read them and how to make interpretations based on numbers. It is crucial because having a sound strategy can take you far in the world of trading.
Some popular strategies include the use of technical tools and indicators. For example, a Moving Average, a Fibonacci retracement, an Elliott Wave, and so on. All these indicators help traders spot larger patterns or recurring ones. This can help improve their accuracy in speculation.
Mastering a trading strategy takes time, and many traders prefer to just focus on one or two strategies at a time when they trade. You should do the same. Get started by reading up on just one strategy and see where you can apply it. The idea is to learn by doing, and you can always refine your technique as time passes by.
4. Trade while on the go
If you are a caregiver, chances are that you do not spend much time sitting at a desk in front of the computer. You may be responsible for carpooling and picking up children after school, and you may also be up in the middle of the night if you are a new parent. But this does not mean trading is not for you. You can always trade while on the go, by making sure your broker has a compatible mobile app on which you can trade.
Simply set up your trading platform and login. You can also set push notifications so you can be alerted when prices move beyond a certain range. This way, you can respond quickly without being rooted to your computer. It can be a convenient way for you to trade, as the forex market is open 24 hours a day, 5 days a week. The next time you are waiting to pick up your children, you can enter and exit a few positions.
5. Come up with a trading plan
Finally, before you get started with trading, you should have come up with a trading plan. This is a plan that helps you gain clarity on why you are trading. Even if you are just trading to pass the time and have no real concerns about whether you will gain or lose money, that is fine, as long as you write it down.
You should also have, in the plan, your financial objective, your preferred trading strategies and instruments, your risk management techniques, your risk profile, and any other information you feel you should know. Think about how much leverage you will use, the timeframes in which you will trade (perhaps aligned with your daily schedule), and the boundaries you do not want to cross. Setting parameters is a healthy way of letting us remain in control of trading.
Sometimes people think of trading plans as rigid, and they think they cannot change what they set down. This is false. While it is true to stick to trading plans as consistently as you can, you are allowed to adjust them if needed. For example, if you’re finding increasing success with trading and you are now ready to take on more risk, you can do so.
The bottom line
If you are a caregiver, you may not have pictured forex trading to be something you can participate in. Perhaps you worry you may not have enough time, or you are not the ‘type’ of person to trade. However, it can certainly be a way to generate some extra income if you do your homework and hone your trading skills. With patience and consistency, you can begin to get acquainted with more instruments and currency pairs.
If you would like to learn more information on forex trading, check out this new article on automated forex trading.
