Trading stocks and currencies was for a long time an opportunity available only to those who worked in big hedge funds and trading firms. But this has drastically changed in the last few years with the emergence of online trading tools and the lowering of requirements to invest.
In this article you will learn 5 simple hacks that will turn your disposable income into a passive profit source and allow you to retire early.
1 – Turn your disposable income into a passive source of revenue
If you have an average or good job, chances are that you can afford to save some money at the end of the month, but here’s the problem with those savings: they just get eaten up by inflation. A solution to this is to invest some of those savings in such a way that they bring you extra money every month. With Forex and Stocks you can achieve this, and contrary to popular belief, you don’t need to know much to get started.
2 – Balance your portfolio
Once you get started with trading, you will learn that many times things don’t go as expected, you can work around this by diversifying your portfolio, it’s usually a very good thing to trade just one or two currency pairs and no more than that, but to improve your results you can also add commodities like oil, gold and silver, and hot stocks like Twitter, Google or Microsoft to your portfolio.
3 – Don’t go all in
Don’t put all of your life’s savings into you brokering account and start trading all of it at once, chances are you will make mistakes and lose all of it, go slowly instead, use some of your money, but keep saving the rest. You can also open practice accounts on most sites, and trade virtual money with no risk at all to get a feeling of how investing works.
4 – Learn from others
This is the best way to learn how to trade, seeing how others open their positions, checking their take profits and stop losses, how much leverage they are using, and just following successful traders in general, some of them even have public feeds in social trading platforms like eToro, so you can see exactly what they are investing in at any given moment.
5 – Use copy trading
This is probably the best way to turn your money into a passive income source, all you have to do is look for successful traders and copy them on social trading platforms. Our favorite is again eToro, because it allows you to follow and copy other traders in an automated way. It’s like having your own personal investment firm working for you, for free.
Another great thing about social trading is that you get information about the sentiment of the market (who’s buying and who’s selling what), this is a very powerful tool that helps you understand things better. Studies show that using these strategies you are 60% more likely to turn a profit, and you don’t even need to know much about trading.
If you don’t feel like putting money upfront, you can always open a practice account to get used to the basics, chances are that you will love trading but sometimes risking money early in the game can be a bit scary.
That’s about it! If you want to learn a bit more about trading Forex and stocks, make sure you read our Forex trading basics page.