Top 5 Ways to Make Money on Financial Markets (Part 1)

In this series of articles, we're going to understand in more detail what the different ways of making money in the financial markets are, how income is accrued for trading different instruments, and where to start if you have no trading experience. You also learn how to make money in the financial market with minimum financial risk and even without investment.

1. Earnings from the currencies exchange

Forex is an international currency market that represents the national currencies of different countries. Brokers are connecting agents, who offer traders access to the market where they can buy and sell currencies, thus making money on price differences: buy cheaper, sell dearer. Another way of earning is offered by dealers: just bet on the rise or fall of a certain currency pair. A forecast, which comes true, becomes the source of income.

Currency pairs, presented at Forex, are divided into three types:

• Major (the most liquid currency pairs);
• Minor (cross rates);
• exotic.

Major pairs are those in which both currencies are from developed economies: USA, Japan, Canada, Switzerland, Australia, UK, New Zealand, and EU countries. Example: USD/JPY. Such pairs occupy the most part of the market.

Cross rates (minor pairs) - those that have no dollar, but currencies of developed economies (specified above). Example: AUD/NZD.

Exotic pairs - those in which there is a major currency on the left, and the currency of a country with a less developed economy on the right. For example, USD/KZT.

We can distinguish two main ways of making money in Forex. The first is earnings on the rise in prices. In this case, a trader buys a currency and keeps it until the price rises, and only then sells it. It is also called trading on a long position; this is how bulls trade.

Another way is to make money on a falling price. Before the fall of an asset, a trader sells it at a higher price and then waits until the price falls and buys it cheaper. This is the way bears trade short positions.

The benefits of making money in Forex:

There are lots of reasons why Forex trading has become one of the most popular ways to make money. Let's analyze the most important of them:

• Free schedule. All a trader needs to have is a laptop, smartphone, or any other device with Internet access to make money on Forex. All deals are made through the Internet and the market operates around the clock, which allows you to work at any time and from anywhere in the world.
• Brokers offer a demo account. If you have no experience in trading, or if you want to test trading strategies without risking your own money, then feel free to open a demo account. This is a kind of simulator, on which you can practice for free and get your first trading experience.
• You can start with small amounts. Trading on Forex is in demand among beginners because the market is full of brokers, which offer minimum deposit requirements. For example, for account opening, you may need only 10 or even 1 dollar.
• The possibility of automatic earning. Experienced traders can create their own algorithm for making deals and orders will be opened and closed automatically. Such algorithms are called robots or advisors and many brokers support this type of trading.
• Training. Most brokers offer clients a database of training materials and courses, in addition, there is a lot of freely available information on Forex trading.
• Fast income opportunity. Traders can earn from trading during the day if they choose scalping or intraday trading.

Disadvantages of making money in Forex:

It is impossible to say that earnings on Forex are the dream of any Internet user since this method does have disadvantages.

• The necessity of knowledge. One can learn how to trade Forex, but it must be understood that a big income is possible only when the trader learns to analyze the market, follow the economic events and keep his hand on the pulse.
• Leverage. This instrument increases the profit, but the losses also increase, so it is worth handling the multiplier with care.
• Forex-kitchens. Forex became sufficiently popular that provoked the appearance of unscrupulous companies, which are also called "kitchens" or "scams".

Who suits to earn on Forex?

Making money with the help of Forex is suitable for those who already have knowledge in the field of economics and finance as well as for those who are ready to learn to analyze the market. You can get income here in the short and long term, depending on the trading strategy you choose.