If you’ve ever considered becoming a forex trader, you have undoubtedly wondered if it would be a lucrative investment. Forex trading has helped many traders to amass a great deal of wealth, while it has caused others to wipe out their investments altogether. There are good and bad aspects to trading and considering those factors is important before deciding if trading is something that you should try.

Below, we will start positive with the plus sides of opening a trading account, before moving on to the cons.

Pros

Flexibility

Forex traders never have to worry about a stressful boss standing over their shoulder. They get to be their own boss, set their own hours, and work from anywhere with an internet connection. There’s no need to commute to work or even to change out of your pajamas if you don’t want to. You could work from anywhere in the world because traveling is no issue. This is one of the main reasons that many people dream about ditching their desk job to become a forex trader.

You can get a free education

Learning everything you need to be a successful forex trader is right at your fingertips, online for free. The internet is filled with articles, videos, and other resources that can be accessed free of charge. It’s true that this will take some effort on your part, but anyone can accomplish this with a little hard work and determination. Remember that investing time into your forex education is one of the most important things you can do before you get started trading.

Leverage

Forex traders use leverage to increase the size of their trades. This gives traders with a smaller amount of capital the opportunity to make bigger profits. This is another one of forex trading’s main draws.

It doesn’t take much to get started

You don’t need much to become a forex trader. Simply sign up with a broker from any device with a working internet connection, make a deposit, and you’re ready! Of course, you’ll want to be well-educated before you start, but even acquiring an education is free. Anyone that puts their mind to it can do this – it doesn’t require having a lot of money already or other difficult steps.

Cons

You need a starting investment

Just to be clear – you can get started with as little as $5, but this isn’t going to leave much room for trading. Those who can afford to deposit a few thousand (or more) dollars are going to make more significant profits. If you’re just looking to make a little extra cash here and there that shouldn’t be a problem, but those that want to support themselves purely by forex trading need to have a larger investment to start with. Sadly, most of us don’t have $20,000 or in disposable income just so sitting in our bank accounts. This means that it will take a while to work up to making larger profits.

Trading is risky

Trading involves investing your hard-earned money with no promises that you’re going to see any profits. Or even worse, you could lose it all. In a way, it involves the emotions one would feel with gambling, that trading decisions are less based on chance. Traders consider a variety of factors, like technical or fundamental analysis, which makes their decisions more founded. Still, at the end of the day, nobody can 100% predict the way the market is going to go.

Leverage

We know that we listed leverage under the pros, but it can also be a con. Many beginners make the mistake of trading with too high of a leverage, which can quickly end your career. Leverage is often referred to as a double-edged sword because it can go both ways. If you’re a beginner, you don’t need to use the highest leverage your broker has available just because you can. Start small and work your way up, or leverage could be your downfall.

Scammers

Scammers can be avoided if one knows what to look for, but many beginners do fall victim to shady brokerages. Whenever you’re looking at companies, check for regulation, and do further research before you give out any personal information or open an account. Some brokers have impossible withdrawal conditions, have customer support teams that you can rarely get ahold of, and so on. New brokers pop up every single day and only some of those options are legitimate. Choosing a forex broker is not a quick decision, choosing the right one takes thought and comparison.

The Bottom Line

Anyone that is interested can become a forex trader with some know-how and a small investment, but one really needs to consider the pros and cons first. You might make a lot of money, or you could lose everything you invest. The good news is that some of the downsides can be avoided. If you secure a good forex education, research your brokerage before opening an account, use a leverage that suits your skill level, and take risk-management steps, then you’ll be more likely to succeed.

The ultimate downside to Forex trading is the risk involved. Even if you’ve been practicing on a demo account, switching to a live account can feel overwhelming and you might not realize the way that your emotions, slippage, or other live conditions could affect you. If you are willing to put in the work to learn, then we fully recommend opening a trading account, just be sure that you’re investing from your disposable income, not from the money you need to live on or support your family. It can also help to adjust your expectations if you’re starting with a small investment.

Becoming a forex trader that works from home sounds like a dream job when you hear some successful traders talk about the benefits, while others struggle with adjusting to trading from home. This might leave you wondering if this is the best job in the world or just a waste of time. Is home-based trading for you? Take a look at our pros and cons to find out!

PROS

Working from home! No need to commute, no boss to answer to, you get the luxury of working from home in your pajamas all day if that’s what you’d prefer.
Saved money: Since you don’t have to use gas to go to work, you’re likely to save upwards of $30-$50 a week (if you usually had a commute to work) that can then be deposited into your trading account. You’ll also be more likely to simply eat lunch at home instead of going through a drive-through every day.
Flexibility: If your kids are sick and need a ride home from school or something comes up, you don’t have to ask for time off. If you want to sleep in, there’s nobody to answer to but yourself. This is one of the main benefits of forex trading, which can be done from virtually anywhere as long as you have a working phone and internet connection.
Making money: Although you could lose money, you also have the benefit of possible surprises when you make much more profits than you expected to. You might even decide to get away for the weekend to celebrate this surprise bonus.

CONS

Distractions are everywhere! A tv playing in the background, your children running through the house, your dog barking outside, and it doesn’t help if your spouse is trying to have a conversation while you’re trying to concentrate. Then again, you don’t have to worry about this as much if you live alone, but you still might be tempted to play on Facebook or take part in other distractions during work time.
Finding an office space: Do you want to work at the kitchen table, or is it covered in food from your kid’s lunch? Laptop in danger of having juice spilled on it if you sit it down on your living room coffee table for even just a second? Maybe you’re lucky enough to have an office or to live alone, but those that don’t may struggle to find a good spot to work.
Too much flexibility: Since you don’t have a set work schedule and no boss to explain yourself to, it might be harder to say no if your friend wants you to come out for lunch or if you just have the urge to get out of the house. Sure, you can trade from your phone, but the increased freedom might leave you trading less often than you should because of these distractions.
Working in an environment that is trading friendly: Do you get fast internet connection where you live? In some rural communities, this isn’t always an option. You might even find that your internet connection barely works when others are connected, so you’ll have to battle your spouse watching Netflix or kick your kids off their tablets if this is an issue.
Profits aren’t guaranteed: With a regular job, you know you’ll be bringing home a paycheck at the end of the week. Trading is more subjective, and you never know if you’ll come out up or down.

Conclusion

Trading from home comes with a lot of pros, after all, it really allows you to be your own boss, gives you the option to be lazy when you want to be, and doesn’t confine you to a strict schedule or force you to ask to be off work if you want to attend an event or take a sudden vacation. On the downside, some traders have issues keeping themselves disciplined once all this freedom sinks in, and this can have a negative impact on your profits. You also never know if you’ll come out with more or less money at the end of the week, some weeks you may be down, while at other times you could find yourself celebrating record profits. If you think you can keep yourself disciplined enough and you have some money to fall back on in case of bad luck, home-based trading might just be for you.