Earn extra income from forex trading starting with the right approach
Some individuals I encountered totally bought the idea of becoming a millionaire in 3 months through forex trading. While it is not an impossible undertaking (since it is a function of how much forex leverage used and the amount of forex trading capital thrown at it), it is not an approach that should be encouraged to lower to middle income wage earners.
That said, an individual new to forex trading can adopt trading as a source of part time income. And rather than aim to run before one can crawl, forex trading can contribute to personal finances enormously even with baby steps.
Extra income to deal with household expenses
|Monthly household expenses in Singapore Dollar||Extra income per month in Singapore Dollar / pips||Equivalent pips per week|
|HDB financing for 4-Room flat - SGD1600||SGD1600 / 1280 pips||320 pips|
|Car financing - SGD1000||SGD1000 / 800 pips||200 pips|
|Saving for a holiday for 2 - SGD600||SGD600 / 480 pips||120 pips|
|Fuel expense for family car - SGD350||SGD350 / 280 pips||70 pips|
|Handphone bill - SGD100||SGD100 / 80 pips||20 pips|
This simple table contains some typical household expenses in a Singaporean family. The figures used are ballpark figures. It is not a comprehensive list but I want to make a simple point. An individual who genuinely wants to overcome monthly expenses and to come up with a surplus can take a step by step approach. The aspiration need not be too high in the beginning i.e. start with the smallest item such as paying off the handphone bill of SGD100. Presented in pips, the individual merely needs to earn 20 pips per week on 1 mini contract. This requires very little commitment in terms of trading capital, time to trade/analyse and can be totally handled by a person who is holding a full time job. In fact the true commitment required is the determination to master forex trading as well as to set aside some time to make more money.
As the trading becomes a way of life and results become better, the individual can move to more expensive items.
Scaling upwards by increasing position sizing
From another angle, a trader who is now able to make 20 pips a week on a very low risk high probability setting can consider scaling up.
- At 5 mini contracts, the trader can make 400 pips per month that pay for both the handphone bill and the fuel expense for the family car.
- At 1 standard contract and 20 pips a week, the trader can make 800 pips per month which will be enough to save SGD 600 per month for a 2-person holiday at the end of the year, the car fuel expense and part of the handphone bill.
Director, TerraSeeds Market Technician Pte Ltd. Trader, investor. @sohtionghum was picked ‘Top 70 Forex Twitter in 2015’. Operates multiple strategies.
“Dear reader, I do not have a financial license to give advice. I do not know you the reader. Your financial objective and risk tolerance may be different from mine. I am not responsible for any consequence of your action.