Side Hustles: How to Make Extra Money Online by Hayden Vernon

Author:Hayden Vernon [Vernon, Hayden]
Language: eng
Format: epub, pdf
Published: 2020-05-12T04:00:00+00:00

Chapter Four

Forex

The idea to try my luck on the foreign exchange market – forex for short – came about because of the coincidence of a couple of things: the sheer number of adverts I came across selling forex as an opportunity to make easy-money on the internet and the conclusion of Brexit. I wanted to capitalise on my matched betting successes and write about making even more quick cash on top of it in my next article. Brexit was coming to an end at the time, with daily news events causing big swings in the price of the pound. Despite knowing absolutely nothing about the financial markets at the time, I hoped to use the chaos Brexit was inflicting on Britain’s currency to cash in on the forex market. News at the time reported that hedge funds stood to make a killing from “shorting” – betting on a fall in value – of the pound in the event of a no deal Brexit and my plan would follow a similar strategy. I would bet on a drop in the fall of the pound relative to other currencies as Brexit unfolded, in the hope of making some easy money.

First, a little background on the forex market. As with online gambling, the internet has made it possible for anyone with a computer or smartphone and some spare cash to start trading wherever they are connected to the internet. The foreign exchange market is responsible for trading the world’s currencies and it is the largest market in the world – dwarfing the major stock markets such as the New York Stock Exchange, London Stock Exchange, and Tokyo Stock Exchange combined. It comprises more than $5 trillion per day in transactions and spans currency trading activity in various exchanges, institutions, and banks all over the world. It is open 24/5, with trades taking place across the globe. This means it is possible to take part at any hour of the working week with just a few clicks from your phone.

On the face of it, the trading process is quite simple but there are a few terms you need to familiarise yourself with. Currencies, such as the pound, US dollars and Japanese yen, are organised into pairs. When you place a trade you predict whether one currency will rise in value (buy) or fall in value (sell) against another. This is called a contract for difference (CFD). Get it right and you make a profit, get it wrong and you lose money. When you trade forex on a platform you are trading it as an Over the Counter (OTC) transaction. This means that you speculate on the movement of currencies against each other, but do not take physical ownership of the actual asset, in this case, money, as it would be unrealistically expensive for a home trader to buy enough actual currency to join the market. Instead, platforms effectively loan you the currency using something called leverage. Leverage involves borrowing a certain amount of the money needed to invest in something.

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