The economic climate in the UK continues to place a significant drain on households and businesses on these shores, as the region slipped into a technical recession that could last for five consecutive quarters according to the Bank of England (BoE).
What’s more, this is likely to be an inflationary recession, with inflation peaking at 11.1% in the UK in October and the cost of food inching even higher at 12.4%.
This is affecting the Isle of Wight and locations across the length and breadth of the country, as households and entrepreneurs search for ways of improving their financial circumstances. But could the gig economy hold the key, and is forex trading a viable way of making additional money in 2022?
What is the Gig Economy?
In simple terms, the gig economy describes a labour market that’s built primarily on temporary and part-time positions, which are filled by independent contractors and freelancers as opposed to permanent workers.
According to statistics, one in six UK adults currently work a gig job at least once a week, while almost half (48%) retain a full-time job at the same time.
Interestingly, the number of gig workers has increased markedly since the pandemic, with this trend particularly popular among youngsters. In fact, a third of those aged between 18 and 34 returned to work in the gig economy post-pandemic, while this trend is likely to continue in the near-term at least.
Overall, gig workers contribute an impressive £20 billion to the UK economy per annum, with this the equivalent of the aerospace industry.
Exploring Passive Income and the Forex Market
Of course, combining gig economy work with a full-time job is increasingly commonplace, but this creates its own unique challenges in terms of managing your time, maintaining a viable work-life balance and working to the requisite standard on a regular basis.
The answer to this particular issue is to seek out ways of earning passive income, with the financial marketplace offering this opportunity to traders and aspiring investors across the board.
Forex trading is perhaps the best example of this, as it’s entirely speculative in nature and enables traders to pursue potentially sizable returns without having to assume ownership of the underlying asset.
Through the FX market, you’ll trade major, minor and exotic currencies in pairs, with real-time prices fixed by a free-floating exchange rate. Of course, there are a select few exotic currencies that are pegged to the value of the USD or Euro, which makes them considerably less volatile and appealing to risk-averse investors.
Not only are currencies speculative in nature and capable of generating a profit regardless of the prevailing economic climate, but major pairs such as the EUR/USD (which accounts for more than 24% of all daily trading volumes on the market) are also highly liquid and continue to benefit from universal demand.
This makes such assets easy to buy and sell in real-time, making it far easier to manage your portfolio and generate short-term profits.
How to Trade Forex as a Part-Time Investor
If you do decide to enter the gig economy and take steps to trade forex, you’ll need to keep a handful of things in mind. Here are some ideas to keep in mind:
#1. Build Knowledge and Practical Market Experience: Knowledge, understanding determinism are key weapons for successful traders, with the former something that should underpin every decision and trade that you make. As for really understanding FX market mechanisms and creating a sense of determinism that helps you to understand the underlying laws that govern the marketplace, we’d recommend using a demo account that affords you access to real-time, simulated conditions in which you can hone your skills.
#2. Manage Your Capital Carefully: Just like gambling, only ever investing an amount that you can comfortably afford to lose is a key rule when forex trading. Of course, this market enables you to access leverage and open positions that are disproportionately higher than your deposit, which unlocks potentially higher returns over time. However, you should consider being conservative when taking on leverage, as this can cause similarly disproportionate losses if the market turns against you.
#3. Start Small and Scale Your Efforts Organically Over Time: Last, but not least, you should always look to start small in the forex market before looking to expand and diversify your portfolio organically over time (in line with both experience and increased profits). Ideally, you’ll start with one or two major currency pairs that optimise liquidity and deliver more predictable returns, as you gradually become accustomed to the market’s volatility and gain crucial, first-hand experience of price fluctuations!
