Being retired is no reason not to consider trading forex, in fact, it can be the perfect excuse to take it up.
In this article, we’re going to explain why taking up forex trading in retirement could be the best decision you ever make.
For a start, you can learn a new skill, there’s no need to sit around and do nothing. You may even find that you have a lot of energy and you want to put it to good use.
Think of your retirement to do something new, a new chapter of your life to start something, but more importantly, you can finally get your money to work for you.
Further to that, you may find that your retirement fund will not be enough for you to survive into old age and probably need to find a way to make your money last longer.
Let’s look at some of the key reasons you should consider taking up forex trading as a retiree.
Want to learn how to trade forex like a pro? Take our free forex course!
Why trade forex?
Because it is the most liquid market and moves the most money. There are more opportunities to enter and exit the market and you can trade with less capital.
Did you know that the forex market moves approximately $5 trillion a day? That’s an astonishing amount of money.
Other markets such as stocks can be more expensive to enter. On top of that, forex can be traded with far less capital as currencies are broken down into pips.
Pips are four digits after a decimal point. Trading with such small amounts also means you can be far more accurate with the amount that you decide to trade.
Further to that, you can open an account with very little money. In most cases, as little as $200 or less is required.
And to make things better, most brokers offer a good deal of leverage. This means that with a small amount of capital, you can trade a large amount of money.
Other methods of saving money can be ineffective
Have you noticed that your savings account doesn’t make that much? To make things worse, most savings accounts don’t offer enough interest to beat inflation.
In some cases, inflation may be higher than what you have saved, making your money worth less than when you originally invested.
To truly make the most of your money, you should be more active. Don’t assume that by locking it up somewhere it will increase in value.
Trading is not just for young people
As someone older, you can benefit from being more mentally mature than most traders. You are wiser and able to make better-informed decisions than younger traders.
You have a wealth of life experience to bring into trading. Plus, most young traders don’t know themselves that well and that can lead them to make mistakes.
Having the right mentality to trade is very important. You should know when you are angry or upset with your trades and know to move away from trading.
If you continue to trade, you may make more mistakes and lose more. And that’s not just when you're in a bad mood, being overly excited and positive and be as equally dangerous.
Critical thinking and decision-making are vital to trading effectively.
On top of that, as an older trader, you will be wiser about how the market works and what influences it.
You would likely have seen throughout your life different economic and political events and how they affected the market.
Some key reasons why older traders make better traders:
- Trade without emotion. Look at trading as just money and not let their emotions take control.
- Rationally look at trades. As a retiree, you’ll have sharper critical thinking skills.
- Make better assessments of risk. Managing risk is more important than making money.
Retirees may understand risk better
The best traders reduce risk as much as possible and are frugal with their money, they don’t splash it around on trades they are not certain of.
They look to lower their risks as much as possible and increase their gains.
If their risk is too high and the reward not significant enough, they will not attempt to make a trade.
The important thing about trading is keeping things simple. There’s no need to complicate things with too many charts, so don’t let the technical side scare you. Simple often means less risk.
Don’t expect to make profits immediately. It takes time to learn to trade, even when you have learned the basics, you still need to learn how to put together an effective strategy
Of course, trading is something you need to learn to do. But don’t be intimidated by learning about trading. We at Trading Education believe anyone can learn.
How much can I expect to earn?
This largely depends on how much you can invest in trading in terms of time and money, and there is no real answer to this question.
It also depends on how you want to trade. There is a key difference between day trading and swing trading.
Day trading, or intraday trading, is when you make a series of trades throughout the day.
Swing trading is where you make one large trade and close it after a certain period of days, weeks or months.
Whatever trading style you decide on, you should look to make a certain percentage back from each trade. Making between 5%-10% is acceptable to most traders.
However, a key thing to remember is that the market will not always climb up. You will not always make money and accepting losses is an important part of learning how to trade.
Your goals will have to change according to how the market is performing. When you are losing it is highly advised that to aim to win smaller profits or simply stop trading.
You should also be wary of success stories. Don’t believe all of them, plenty are false, exaggerated or just stories of dumb luck.
Whatever age you may be, you need to set realistic and achievable goals that can be updated over time. This is perhaps the most important thing to strive for as a trader.
To be successful, you need to be consistent.
You should also only invest what you are willing to lose. Money that you can mentally accept as gone if lost.
As a retiree, short-term goals may be considered more important
A key thing retired traders will have to get used to is thinking in the short-term. For a long time, they will likely be thinking about the long-term; saving for the future, their retirement.
They will now have to think about how to make things profitable now instead.
Retirees should be more careful than younger traders as they have less time to make up for losses.
However, retired traders can also benefit from having disposal income that most young traders do not have. Of course, though, don’t trade with money you need to live.
You should have a dedicated amount of money for trading and dedicated money for living. After all, forex trading is a business and it should be treated like one, it’s not like playing the lottery.
As a retired person, if you are well-capitalised, you will have an advantage as you will not feel pressured to always make money.
Trading becomes more of a pass time than a career.
Younger, less capitalised traders may feel this pressure as the money they make or lose is all they have.
Without this pressure, you can take your time to learn and be more confident with your trades.
Too much pressure can result in bad trading decisions, such as entering or exiting the market too early or too late.
If you don't like the idea of short-term trading, long-term trend trading strategies may be a better option.
They require much less effort which will result in less stress on yourself and more time on your hands.
Also, another strategy you could implement is to only trade during market overlap. This is when the London market overlaps with Tokyo or New York.
These sessions are known to be more active than the rest of the day and only last a couple of hours. This strategy will also give you more free time throughout the day as well.
eToro – Best Social Trading Platform
67% of retail investor accounts lose money when trading CFDs with this provider.
Key points
If you remember anything from this article, make it these key points.
- Trading forex isn’t just for young people. As an older trader, you will have a much better temperament and be less emotional.
- Retirees have less time and should focus more on making money in the short term. This means making smaller, quicker trades.
- Trading is a great skill to learn with your free time. Learning a new skill after retirement is highly recommended.
- The forex market is the largest in the world. It offers far more opportunities than any other market.
Learn to trade with our free forex trading course
Want to learn more about forex and how to trade? Then sign up to our free forex trading course!
If you enjoyed reading this article from Trading Education, please give it a like and share it with anyone else you think it may be of interest too.