Updated: February 2, 2017
Basic economics teaches us that human wants are unlimited but the resources to meet those wants are limited. In essence, we have a limitless number of things we would like to buy but the money to buy those things are limited for most of us and that’s why economists developed what they call a “scale of preference”.
For students, the unlimited wants versus limited resources is more pronounced because you have juggle a whole lot of things in a typical student lifestyle in addition to living within a budget.
You have classes to attend, term paper assignments to submit, presentation deadlines, and an unending stream of social invitations to weekends away, charity shows, and whatnot.
Unless you come from a privileged background, you’ll take on student loan, get a late hour/weekend job at the diner down the road, or withdraw into an isolated life in the midst of a crowd. However, you can have an active and balanced student life by trading forex on the side in order to make a decent side income.
What is Forex Trading?
Forex trading is simply a global trade in which people buy and sell a pair of currencies in the hopes of making a profit from the difference. Let me explain it in the simplest terms.
Let’s assume that you are travelling to the UK and you take $200 to your bank to change into Pounds – let’s assume that the bank gives you â‚¬180 for the $200. Now, by some stroke of luck you went to the UK and came back after two weeks without spending that â‚¬180. So, you head back to your bank to change back the â‚¬180 to dollars. Your bank collects the â‚¬180 and they pay you $210 on the spot.
You have just conducted a forex trade, you bought â‚¬180 for $200 and you sold it back for $210 after two weeks. That is basically what forex trade is all about, except that you don’t need to go to a bank, hold the currency for two weeks, or even travel out of the country.
You can buy and sell the currency pairs in the comfort of your home with a computer connected to the Internet.
Trading forex is not for bankers alone
In some decades past, forex trading used to be the sole business of investment bankers and financial institutions. Now, the Internet has decentralized forex trades and anyone with a computer and reliable Internet connection can trade on the global currency market.
Students have the best opportunities to trade forex on the side and it is often amazing how many people fail to see an opportunity right before their very noses. Most students (by virtue of the “job”) often lug around a backpack that contains a laptop – and that’s a mobile office for forex traders.
If you are the typical student, you’ll most likely have a smartphone or tablet device with which you can check in on the market and your trades via your forex broker app.
More so, college campuses are often a massive network of Internet hotspots, which are mostly free. You’ll most likely get free Internet via Wi-Fi in the Library, cafeteria, lecture halls, hallways, auditoriums, and even in your room if you live on campus.
Instead of using that Wi-Fi to stream the latest episode of Game of Thrones, why not make some money on the side through forex?
A background in finance is not a prerequisite for trading forex
Another reason many shy away from trading forex is that they think that forex trading requires some specialized education in the financial markets. Of course, you shouldn’t jump into forex trading without first learning how the market works. However, you don’t need to have a background in finance before you can trade forex profitably.
Many people are scared of trading forex because they don’t know how to make heads and tails of all those squiggly lines that fill the computer screens of professional traders. You don’t need to understand (or use) all those technical indicators before you can trade forex profitably.
All you need is a firm understanding of key support and resistance levels coupled with an understanding of economic fundamentals. With support and resistance, you know how high a currency pair can fly before it reaches a ceiling and how low it can fall before it finds a bottom.
It requires some work – nothing good comes easy
Forex trading sounds very simple and easy on paper but it actually requires some work before you can start trading forex gainfully. You’ll need to learn the basics of forex trades, learn about forex for beginners, develop a trading strategy, toughen yourself emotionally to control greed and fear, and then find trading capital.
Let me add a caveat here, if you are not committed to doing the “pre-trade” hard work, you will most likely be gambling instead of trading and you could as well put take your money to Las Vegas and blow it up in the casinos.
If you take part in collegiate sports or you interact with college athletes, you’ll know the importance of practice to staying on top of your game. Likewise, in forex trading, you need all the practice you can get in order to improve your odds of trading profitably.
You should start your forex trades with a demo account so that you can test your trading skills with practice money. You should only start trading on a live account when you have been consistently making profits on your demo account for about three months.
Here is some motivation for you
A little over one year ago, the Daily Mail reported the story of Mohammed Islam, a 17-year old New York schoolboy that has made $72M from trading online during his lunch breaks.
Mohammed is a son of immigrants from the Bengal region of South Asia. He attends New York’s Stuyvesant High School and he has a net worth in the high 8-figures range.
He has bought a BMW and a Manhattan apartment, he frequently takes his friends out to dine at Morimoto on 10th avenue where they feast on $400 caviar and other expensive dishes and he plans to start a hedge fund with his trading friends and make $1B.
If a 17-year immigrant in high-school can trade his way to wealth and fame, there’s nothing stopping a college student from trading forex profitably.
This article is written by Joe Schriefer, a forex trader based in London.