The rise of the Internet, with its amplified level of accessibility, coupled with increased advertising, has resulted in a boom in online trading globally. As a result, a large number of retirees in South Africa have turned to online Forex trading to increase their monthly income. However, many are ill-equipped with the required skills and knowledge to trade successfully in a competitive foreign exchange market.
This is according to Graham Atkinson, an advanced trader mentor at Knowledge to Action, a leading Forex training, development and education organisation, who says while there is potential for retirees who have sufficient funds available to trade Forex and generate additional capital, online trading education is paramount. He urges all retirees who are considering trading Forex online to ensure they receive the necessary education before entering into high risk markets without the essential tools.
Never use living expenses
"Many retirees use their retirement savings, or take out loans from the bank to trade Forex. Only expendable income should ever be used to trade Forex and never monthly living expenses. Increased education on the factors that cause currencies to move will allow for more profitable trading decisions. The Forex market is constantly evolving and for sustained success, one should never stop the education process."
Atkinson explains that an estimated $4.3 trillion is traded in Forex globally per day and this is being fuelled by factors such as a difficult world economic climate and drops in job security, which is encouraging individuals to become less reliant on employers and traditional forms of generating income. "It is also much more accessible than say 10 years ago as today you can trade with as little as $200, compared to the required couple of million previously."
Three elements must be mastered
According to Atkinson there are three vital elements to Forex trading that need to be mastered by retirees before jumping into the market. These include risk control, fund management and discipline. "Though retirees are in a great position to use their lifetime of experience to supplement their savings or pension with Forex trading, they must be aware that Forex trading requires expert analysis skills.
"It is also imperative that a retiree's financial plan uses only 5% wealth speculation. Traders need to manage their accounts in such a way that no more than 1% of the available capital per currency is traded at any given time." Atkinson says that currency trading is known as a market that requires disciplined trading and controlled emotions. "Successful traders must have discipline and follow the rules otherwise they will fall short and potentially lose their lifetime savings and investments."
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