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Forex Trading - Why It Should Never Be Your Only Source Of Income
I received an interesting email recently from someone who was made redundant from his job in finance in September last year. He says that he has been successfully making money from forex trading (working from home) for around four months now, but is constantly worried about his current situation because it is, at the moment, his only source of income.
I can absolutely relate to this situation because I have been working from home since around 2002 and during that time I have made a living through trading the FTSE 100 on the betting exchanges (which was easily the most successful and profitable period of my life before the bots took over), and then through share trading and forex trading. However I constantly had a feeling of insecurity because I always thought that one day the profits would dry up, and I would have to get a proper job.
Even now, at the age of 33, with a decent amount of money saved up, I still have occasional days where I wonder about how secure my future really is. For example I will ask myself questions such as:
- What happens if my 4 hour trading system suddenly stops being profitable?
- How will I make money from my share trading if we suddenly get another long and sustained bear market?
- Will I still be able to make a good living from my share trading and forex trading in 5-10 years time?
The reality is that market conditions can change and there is no guarantee that I will continue to be profitable in years to come. That is why I believe that you should never rely on forex trading, or indeed share trading, to be your only source of income.
Yes you may well have made money for a good few years now, or four months in the case of my reader, but profitable trading systems do not always remain profitable forever. Market conditions can easily change and you can suddenly start losing money if you are not careful.
This can lead to a catastrophic chain of events because if you are relying on this income to pay your bills and give yourself a reasonable standard of living, then you may find yourself losing your discipline and taking more and more risks in order to become profitable again. This in turn will generally lead to even more losses.
So my advice would be to always have more than one income stream coming in, and ideally multiple income streams just for added security. In my case I generally make a decent profit from my forex trading every week, but this is supported by short term share trading profits, ie spread betting, and long term investments in boring growth stocks such as Tesco that pay a decent dividend every year. I also make a reasonable income from this website and a few other websites that I run.
In other words I have four different income streams, which gives me a good level of security. It also eliminates a lot of stress because you know that if you have a bad week trading forex or stocks, you will probably still make money and come out ahead thanks to your other sources of income.
Therefore my final words of advice for my reader would be to put some of your money into other assets such as property, stocks or some kind of business because relying on forex trading alone is not only very stressful, but it is also very dangerous.
I received an interesting email recently from someone who was made redundant from his job in finance in September last year. He says that he has been successfully making money from forex trading (working from home) for around four months now, but is constantly worried about his current situation because it is, at the moment, his only source of income.
I can absolutely relate to this situation because I have been working from home since around 2002 and during that time I have made a living through trading the FTSE 100 on the betting exchanges (which was easily the most successful and profitable period of my life before the bots took over), and then through share trading and forex trading. However I constantly had a feeling of insecurity because I always thought that one day the profits would dry up, and I would have to get a proper job.
Even now, at the age of 33, with a decent amount of money saved up, I still have occasional days where I wonder about how secure my future really is. For example I will ask myself questions such as:
- What happens if my 4 hour trading system suddenly stops being profitable?
- How will I make money from my share trading if we suddenly get another long and sustained bear market?
- Will I still be able to make a good living from my share trading and forex trading in 5-10 years time?
The reality is that market conditions can change and there is no guarantee that I will continue to be profitable in years to come. That is why I believe that you should never rely on forex trading, or indeed share trading, to be your only source of income.
Yes you may well have made money for a good few years now, or four months in the case of my reader, but profitable trading systems do not always remain profitable forever. Market conditions can easily change and you can suddenly start losing money if you are not careful.
This can lead to a catastrophic chain of events because if you are relying on this income to pay your bills and give yourself a reasonable standard of living, then you may find yourself losing your discipline and taking more and more risks in order to become profitable again. This in turn will generally lead to even more losses.
So my advice would be to always have more than one income stream coming in, and ideally multiple income streams just for added security. In my case I generally make a decent profit from my forex trading every week, but this is supported by short term share trading profits, ie spread betting, and long term investments in boring growth stocks such as Tesco that pay a decent dividend every year. I also make a reasonable income from this website and a few other websites that I run.
In other words I have four different income streams, which gives me a good level of security. It also eliminates a lot of stress because you know that if you have a bad week trading forex or stocks, you will probably still make money and come out ahead thanks to your other sources of income.
Therefore my final words of advice for my reader would be to put some of your money into other assets such as property, stocks or some kind of business because relying on forex trading alone is not only very stressful, but it is also very dangerous.
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