Like any enterprising individual, you’ve probably been looking around for clever ways to earn extra money outside of your job. You might even have a list of the best side hustles to earn spare cash.
Who knew that you could earn money by trading money?
That’s what we call trading forex–and it’s the best idea you never thought to try. Read on to learn more.
What Is Forex Trading?
Forex trading is a lot like the stock market. For those who are a little shaky on the specifics of the stock market, no worries. We’ve got you covered.
Forex is short for foreign exchange, and it’s where currencies are traded. In fact, forex trading is all about buying and selling currencies.
Like we said–you’re earning money by trading money. Like interest, but active, and way more interesting (pun intended).
How Does Trading Forex Work?
Let’s say you have a currency you’d like to trade. Egyptian pounds for Euros, for example.
As you can guess from this example, all trading is done in pairs–you sell one currency in order to buy another.
Think of when you went on vacation in a foreign country. You exchanged the currency of your native country for the currency of the one you’re visiting.
That’s the same basic idea behind forex trading. You’re exchanging one currency for another.
The most common type of forex trading is called spot trading, which is simply a purchase of one currency with another. In more complex terms, the trader (you) buys the currency at the market price from the dealer.
As a rule, the buy price is usually higher than the selling price. This difference is called the spread.
How to Make Money in Forex Trading
So, how do you earn money in forex trading?
Remember the spread–the difference between the buying price and the selling price? Basically, you earn money by working the spread to your advantage.
More specifically, you can earn money either by an appreciation in the value of the quoted currency or by a decrease in the value of the base currency.
For clarity, the quoted currency is the amount of currency that one unit of the base currency can buy. For example, let’s say one US dollar is equal to 1.12 euros. The US dollar is the base currency, and the euro is the quoted currency.
There are a variety of forex trades available, depending on what you want to accomplish. The key is to be smart about how you’re buying your currency.
It’s a lot like buying stocks, in that you want to buy before the currency value goes up to get a return on your money (or sell before the value drops).
If you want to learn, it’s a good idea to learn from other forex traders. If you want a comprehensive directory of regulated forex brokers, you can get more info from Regulated Forex Brokers.
And if you’re a savvy investor who’s also interested in stocks, here are the nine best stocks to buy.
Earn Extra Side Cash Beyond Forex
If you’re a smart saver and investor, you know that the key to a healthy financial future is to diversify your assets. This must extend beyond trading forex, real estate investing, or any other clever money maneuvers you might try.
We’re here to be your resource on saving money because your financial future doesn’t have to be a frightening gap.
If you need an idea of where to get started with investing, check out our complete beginner’s guide to investing.