Passive income has turned into a buzzword in today’s business world. While investing in real estate and working on a blog are classic examples of passive income sources, many people look into other ways. They may wonder: Can forex trading be a source of passive income?
Traditional Forex trading can’t be a passive income. You need to work on your account, grow it, and continuously learn and gain experience to turn it into a viable income source. However, copy trading, managed accounts, forex signals, and forex robots are good passive income sources through forex.
Read on to see how you can use these methods to generate passive income by trading forex.
IMPORTANT SIDENOTE: I surveyed 1500+ traders to understand how social trading impacted their trading outcomes. The results shocked my belief system! Read my latest article: ‘Exploring Social Trading: Community, Profit, and Collaboration’ for my in-depth findings through the data collected from this survey!
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Can You Earn Passive Income Through Forex?
Passive income refers to the earnings you make with little or no work. It requires upfront money or time investment and varying degrees of effort to maintain and nurture. After some time, it can bring you income without any need to work on your part.
Real estate business is a form of investment that doesn’t need much effort from the beginning. You can rent your property out and earn a regular income. However, a YouTube channel or a blog requires lots of effort until you grow it to the point that it earns you passive income.
Traditional forex trading can’t be a good source of passive income because it’s not a type of investment; it’s trading. And trading means real active business. You have to spend lots of time every day tracking market trends, reading signals, and even following political and economic news to take a profitable position.
You need to develop trading strategies based on your trading goals and investment profile. Your account needs constant monitoring, and your strategies need modifying and tweaking. It’s nothing like investing in real estate that brings a steady income source by not working on it.
Still, you can earn passive income in forex through other ways. Here are the most important and smart ones.
5 Ways To Earn Passive Income Through Forex Trading
Copy-Trading
Also known as social trading, copy trading is an information-sharing scheme that helps traders copy each other.
It’s particularly helpful to beginners by directly copying an expert’s position. In this method, you automatically attach your portfolio to another trader’s account. Thus anything that a trader does on their account applies to your account. These actions include opening or closing a position, setting different orders, etc.
That’s a passive form of trading in that it doesn’t need any market analysis or decision-making on your part. However, if you want to learn the market dynamics and how to trade, you can follow the trading “guru’s” actions and gain deeper insights into trading forex.
The challenging part of copy trading is finding an experienced and reliable trader with a successful track record. It needs searching different platforms and maybe paying commissions to the trader.
Forex Signals
Forex signals are tips and information indicating when to enter a trade and which currencies to choose. These signals also instruct traders to buy or sell a currency and place different orders, such as market, pending, or limit.
While the method helps you generate passive income in the long term, it won’t be completely passive at the beginning. That’s because you need to learn how to read and understand signals and how to take action accordingly.
You can find these signals on different platforms, such as social media, forums, and websites. Once you subscribe to a signal-providing service, you’ll receive instructions through SMS, email, or other means of communication. When opening a position, they also send you the appropriate signal to act accordingly.
Although paid signals tend to higher quality, it’s also possible to find free signals. And free doesn’t always mean bad. Some sources try to boost their reputation by providing free services.
However, the catch is to find a reliable signal provider, or you’ll lose big time. Try not to fall into scams by the lure of earning passive income without you getting involved. Many incompetent wannabe traders decide to earn money by providing low-quality signals.
Forex Robots
Forex robots are the best means of earning passive income since they run your account even when you’re sleeping. These robots are program codes that analyze the market and automatically perform trades on the trader’s behalf. You set up your desired stop-loss orders, risk levels, and take-profits, and the bot will take care of everything else.
However, depending on your freedom and expertise, you may want to do some trading steps yourself. Even if you decide to leave all your responsibilities to the robots, it would be wise to monitor things carefully to ensure it’s going well.
These robots have built-in trading algorithms that help them open and close trades. They also use predetermined forex signals to perform trades independently. The most important advantage of a forex robot is arguably its lack of emotional trading. When it loses or earns money, it doesn’t engage in trading out of fear or excitement, unlike humans.
There’s a wide variety of software and robots in the market. So, you need to do your homework to choose the best one that fits your goal.
Some robots are free, and others are paid, but both can quickly spot profitable trends and place trades in them. What matters is to check out online reviews and testimonials to ensure the robot is trustworthy. Some forex robots are scams, irrespective of what they charge you.
Forex Managed Accounts
Forex-managed accounts are a perfect alternative if you don’t want to engage in trading. Through a managed forex account, you get a licensed trading firm to act on your behalf. Most of these accounts don’t need fixed fees. Instead, they collect a percentage of your profits in each trade. So, they have to make smart moves in placing trades to ensure they get a cut of your profits.
Once you set up the managed account, you give full control to the account manager. But you’re still able to see your account’s status and track your income and losses. You can manage the commission and fees by signing agreements, called a limited power of attorney, to keep everything under control.
This method costs more than others, but it’s safe because you can apply safeguards to avoid losing money and scams. However, you have the least control over your account since the manager runs everything.
Forex Broker Affiliate Partnerships
If you have lots of followers and friends on social media accounts, this opportunity helps you earn some passive income. In this method, you partner with a broker, encourage your friends to become the broker’s client, and receive a commission. It can be a fixed fee or a percentage of the traders’ profits.
You could also use online forums as a way to build referral links and refer users to your partner broker. All you need is to get a referral link from your broker and place it on your website, mailing lists, social media pages, etc.
You may need to work on your network of friends and set yourself up as a reliable source to give forex-related advice.
Author’s Recommendations: Top Trading and Investment Resources To Consider
Before concluding this article, I wanted to share few trading and investment resources that I have vetted, with the help of 50+ consistently profitable traders, for you. I am confident that you will greatly benefit in your trading journey by considering one or more of these resources.
- Roadmap to Becoming a Consistently Profitable Trader: I surveyed 5000+ traders (and interviewed 50+ profitable traders) to create the best possible step by step trading guide for you. Read my article: ‘7 Proven Steps To Profitable Trading’ to learn about my findings from surveying 5000+ traders, and to learn how these learnings can be leveraged to your advantage.
- Best Broker For Trading Success: I reviewed 15+ brokers and discussed my findings with 50+ consistently profitable traders. Post all that assessment, the best all round broker that our collective minds picked was M1 Finance. If you are looking to open a brokerage account, choose M1 Finance. You just cannot go wrong with it! Click Here To Sign Up for M1 Finance Today!
- Best Trading Courses You Can Take For Free (or at extremely low cost): I reviewed 30+ trading courses to recommend you the best resource, and found Trading Strategies in Emerging Markets Specialization on Coursera to beat every other course on the market. Plus, if you complete this course within 7 days, it will cost you nothing and will be absolutely free! Click Here To Sign Up Today! (If you don’t find this course valuable, you can cancel anytime within the 7 days trial period and pay nothing.)
- Best Passive Investment Platform For Exponential (Potentially) Returns: By enabling passive investments into a Bitcoin ETF, Acorns gives you the best opportunity to make exponential returns on your passive investments. Plus, Acorns is currently offering a $15 bonus for simply singing up to their platform – so that is one opportunity you don’t want to miss! (assuming you are interested in this platform). Click Here To Get $15 Bonus By Signing Up For Acorns Today! (It will take you less than 5 mins to sign up, and it is totally worth it.)
Conclusion
Forex trading can’t generate a viable source of passive income. However, you can try some other ways to earn money without participating in the actual process of trading.
- Copy-trading involves finding a successful trader, attaching your profile to their portfolio, and automatically copying all their trading activities.
- Managed accounts allow you to delegate the whole trading process to an experienced trader in return for a cut of your profits.
- Forex signals give you every detail you need to place trades.
- Forex robots are also useful since they can do everything for you.
BEFORE YOU GO: Don’t forget to check out my latest article – ‘Exploring Social Trading: Community, Profit, and Collaboration’. I surveyed 1500+ traders to identify the impact social trading can have on your trading performance, and shared all my findings in this article. No matter where you are in your trading journey today, I am confident that you will find this article helpful!
Affiliate Disclosure: We participate in several affiliate programs and may be compensated if you make a purchase using our referral link, at no additional cost to you. You can, however, trust the integrity of our recommendation. Affiliate programs exist even for products that we are not recommending. We only choose to recommend you the products that we actually believe in.
