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How to Generate Passive Income from Forex Trading

By The 1-Hour Workweek 4 years ago9 Comments

The term passive income basically means earning a regular stream of income without taking so much of your time and energy to generate and maintain it. Common passive income streams include income from rented out real estate, royalties from books or music, and new online revenue streams from network marketing, affiliate marketing and online advertising.

Passive income can also be obtained from financial instruments like stocks and other investments. Among these instruments include Forex trading, a unique financial investment tool that if practiced properly according to what will be shared in the next sections – can earn for you substantial passive income that can set you up comfortably in the years to come.

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Using Money to Make More Money

When people talk about financial investments or using money to make more money, investing in stocks and shares immediately comes to people’s minds. But for many wanting to earn a really good passive income stream, trading in stocks may seem like a full-time job. They’ll spend considerable time monitoring rates fluctuate on a daily then eventually earning a mere 4% yearly dividend from all their efforts. What they want is a good financial instrument that can earn them higher passive income rates at a shorter span of time. They can get this by trading in foreign exchange.

At 4 trillion dollars each day, Forex trading, foreign exchange or currency exchange stands as the largest financial marketplace in the world. It is similar to stock trading as you need buy currencies when they are low and sell them when rates go high and earn profits from the difference. However, there are certain aspects in Forex, like less restrictions on brokers and trading anytime of the day, that makes it a unique financial instrument that can earn you considerable passive income.

Using Forex Trading to Generate Passive Income

If you want to earn passive income through Forex trading, you will need to understand that you are buying and selling foreign currencies in pairs and not as individual currencies. Trading in pairs means you will be exchanging one currency with another such as Euros and US Dollars. Just like stock trading, the key to success in Forex trading is to know exactly when is the right time to buy or exchange currencies and knowing the right time to sell currencies to earn a substantial profit.

There are basically two types of Forex trading, one of which can generate for you considerable passive income. The first type of foreign exchange is Discretionary Forex Trading, which is basically based in the buying and selling of foreign currencies. You earn based on these trading activities. Without any trading activities, there will be no income. You don’t earn passive income from discretionary Forex trading.

To earn passive income from Forex trading, you need to automate the process and participate in a Forex system trading process. The trading system makes the process a hands-off operation, thus making the whole system qualify as a verified passive income stream. On top of that, earnings from positive interest rate differentials are passed on to the customer, making it another passive income stream.

How to Generate Passive Income from Forex Trading

The Forex trading system is a fully automated financial system that runs on a 24/7 basis (except during bank holidays and weekends) on trading markets that span the whole world. You are connected and be able to trade in the international foreign currency market that lets you earn substantial percentage increase each time you undergo the buying and selling of currency. The following describes the step-by-step process on how you can generate passive income from using a Forex trading system.

  • Open an Account with an Online Forex Broker

This will be your window to the Forex market and there is practically no initial cost and no monthly bills for you to open an account with your chosen online Forex broker. These online brokers earn from the small commissions from the trade earnings you get by following the trade strategies they share with their subscribers.

What this means is that if they perform well in the Forex marketplace, you also get to earn good income, and they earn commissions from each successful transaction. They earn when you earn – a really good win-win financial investment that can earn you good passive income.

  • Deposit the Minimum Amount to Your Account to Start Trading Online

Many of these brokers require a minimum amount deposited to your account before you can start with the actual Forex trading process. This minimum deposited amount will be your initial investments that you will use during the trading process. Deposits are made through Paypal or through a credit or debit card among others.

The amount you can deposit depends on how many traders you would like to copy, but understand that the more you can deposit means the more opportunities for you to earn. On top of that, some trading platforms offer certain bonuses and plusses when you make a first-time deposit. So take advantage of these offers and make the best from your first deposit.

  • Follow the Automated Process of 3 to 5 Leading Traders 

After you’ve made your initial deposit, you can now select good traders whose automated process and trading system you would like to pattern after. Many of these online Forex brokers already have a good and compact system that will make it easy for new traders like you make the trading operations smooth, easy and profitable. When choosing the traders you would like to pattern after, the following factors can help you in the selection process:

  • Check the Trader’s Trading History – this will tell you the performance of a particular trader over a certain period of time.
  • Check the Trader’s High Risk Behavior – The key to passive income in Forex trading is to get a continuously positive ROI that is steady, sustainable and consistent. You need not earn a million in a single sitting. Avoid copying traders who behave like that.
  • Copy only from real traders and not those who mimic other traders as well – You can determine from the trader’s portfolio if they have copied from other traders. It would be best and to your greatest advantage to copy from traders who execute transactions themselves and not rely on others just like a newbie would.
  • Check the trader’s most recent trades – Select traders to copy who are active and are frequently trading by checking out the number of their most recent trades. Note that negative trades in some cases doesn’t mean the trader is not good, particularly if they eventually turn into positive ones. It just shows the trader is a real player and can lead you the way to passive income.
  • Evaluate Your Traders’ Performance at Least Once a Week

It would be really beneficial if you monitor how your traders are doing in terms of performance. You can do this at least once a week, just spending an hour or so to monitor and check if their performance is improving or declining. You can then decide if you should make adjustments, select a new trader, and improve on your overall portfolio performance.

  • Know When You Should Pack Up and Quit

One of the reasons why many fail in getting passive income from Forex trading is that they treat it as gambling and not as an investment. Gamblers like to make their stand even if they see that pursuing a particular trader means a negative trend in performance. Just because you earned good profits by following a particular trader doesn’t mean you have to stick it out and follow them even though the monitoring signs show otherwise.

You should know when to bail out, take minor losses, and move on to another trader who can earn you better passive income. Don’t settle for the short term even if it seems to appear profitable. It’s all about the long term passive income profits that you can earn. Stick to what the performance monitor tells you and adjust your trading according to where the market is heading.

Trading in the Forex market can be very complicated, but it can also be fun, worthwhile and very profitable if you follow good practices that can earn you passive income for a very long time. It is important that you start learning all the basics, and by following the guidance PIFormula has to offer – you’re on your way to earning your passive income goals.


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 The 1-Hour Workweek

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