Forex: Not All Your Eggs in the Same Basket

Filed under: Learn Forex Trading |

I think that trading the forex market is a great way to earn a supplementary income, and over the long term, if you become proficient enough, there is the potential to become a professional trader and make the majority of your income from trading. However, all too many beginners get over-excited by the world of forex trading and think that they can make a living from it overnight. This sadly, is rarely (if ever) the case, and more often than not, people end up losing their life savings and quitting their jobs – and sadly, end up with nothing.

 

What I would suggest is that, whether you are a beginner or a professional, to never put all of your eggs in the same forex-trading basket. Trading is never going to give you a stable wage, as the profits will be variable by nature. Therefore, it is better to have other streams of income as insurance against any market volatility. For example, you could invest in property and get some cash flow from rental income, or you could have a number of part time jobs that bring in a steady income. Whatever you do, make sure that you have multiple income streams if you are trading forex, otherwise, you will start to trade with your emotions, and that is the road to ruin.

 

I would suggest not thinking about giving up your day job when you start trading forex. Maybe if you have been trading for several years and you are consistently profitable, you can take this step. But even then, you should make sure that you are well funded and that you can withstand any major drawdowns. Moreover, if you can generate other streams of income, then trading will become a whole lot easier, as you will not be relying on making profits to pay your rent or mortgage.

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