There’s no doubt that a growing number of people are currently living as so-called “digital nomads”, with these individuals banking a flexible income stream as they travel the world.
According to figures from 2022, some 35 million digital nomads were located across the globe, with 23.2 million of this number residing in America. This number was also up 37% year-on-year, while we’d expect this trend to continue unabated in the years ahead.
Interestingly, a March 2023 study revealed that 36% of surveyed digital nomads boasted an annual income of between $100,000 and $250,000. What’s more, just 6% of respondents reported annual earnings of less than $25,000 per annum, with this having much to do with the type of jobs and income streams that are synonymous with a digital nomad existence.
For example, a growing number of digital nomads now make their money through forex trading. But what are the benefits of this, and what steps can you take to successfully trade currency while travelling?
What are the Benefits of Forex Trading for Digital Nomads?
Let’s start by appraising the benefits of forex trading for digital nomads, as there are a number of income streams accessible to those of you who work in this way. These include:
- Trade Anytime and Anywhere: The forex market is a huge global entity, and one that sees an estimated $6.6 trillion traded every single day. The market is accessible 24 hours on most days, while activity is separated into three distinct trading sessions. Because of this, you can trade anytime and anywhere, while tailoring your schedule to suit the peak trading volumes of your preferred assets (as this helps to optimise liquidity). This is ideal for digital nomads, who like to work flexibly and access the market as and when required.
- Generate Passive Income: The majority of forex trades are now automated to some degree or another, as investors leverage advanced algorithms and the best forex signals to optimise both accuracy and the volume of orders executed. You can even incorporate stop loss orders, which automatically close positions once they’ve incurred a predetermined level of loss. So, once you’ve determined the initial entry and exit points for your trades (usually on the basis of technical analysis), you can sit back and leverage forex as a passive income stream.
- Forex Trading is App Driven: Forex trading is increasingly being carried out on mobile devices such as smartphones and tablets, which suits digital nomads down to the ground. What’s more, most forex trading apps are convenient and incredibly secure, boasting 128-bit encryption and two or multifactor authentication. They also afford you access to the same trading experience that you’d expect when using a desktop device, so you can trade freely on the move without having to compromise on the frequency of your trades or indicators that you use.
How to Succeed as a Digital Nomad
Despite the innate advantages offered by currency trading, the forex market is highly volatile and prone to price movements that are both marked and unexpected. It’s also a highly leveraged space, which means that you can open positions that are significantly larger than your deposit size.
This increases the risk of incurring disproportionate losses in the pursuit of gains, so it’s crucial that you take proactive steps if you’re to trade forex successfully as a digital nomad. Here are some measures to help you on your way:
Control Leverage and Start Small
In some cases, leverage enables you to open positions that are 100x the value of your cash deposit or margin, even when using reputable and licensed brokers. However, this isn’t recommended unless you’re a seasoned and risky hungry trader with significant resources, as the potential losses here could prove seismic.
So, it’s crucial that you manage leverage carefully in line with your starting capital, experience and profit expectations, with a view to safeguarding your income and striking the delicate balance between risk and reward.
Generally speaking, it’s also important to start small and form a solid base of knowledge when trading forex as a digital nomad. This ensures that you set the right criteria and entry points for your trade, while also creating a foundation from which you’re able to scale your efforts organically over time.
We’d recommend that you start by trading one or trading major currencies, with seven major pairs (which all feature the dominant US dollar) accounting for 85% of all FX trades. Then, look to incorporate minor and exotic currencies as you scale over time, while also looking to diversify your portfolio with alternative asset classes.
Choose the Right Trading Strategy
There are also numerous ways in which you can trade forex as a digital nomad, depending on your wider philosophy and appetite for risk.
If you want to leverage forex market volatility to your advantage, for example, you could consider engaging in scalping or day trading. These are short-term trading strategies that see you pursue incremental profits from a high volume of orders, which cover a relatively short period of time and are never kept open overnight.
Conversely, you could engage in swing trading, which requires you to keep positions open for days, weeks or even months and minimise the impact of short-term market volatility. Then there’s position trading, which creates a de facto ‘buy and hold’ investment strategy that sees you back the long-term growth of an underlying asset.
The key is to understand each strategy and available investment vehicle in detail, before determining which one best suits your trading outlook and philosophy.
Consider Social or Copy Trading
On a similar note, you’ll also need to identify ways in which you can optimise efficiency and minimise the time required to trade forex as a digital nomad.
One option in this respect is copy trading, which enables you to subscribe to a specific trader through a dedicated app and have all of their executed trades replicated on your account. Once you’ve identified one or more viable traders, the entire process is automated and you can bank profits with minimal effort.
This is a subset of so-called “social trading”, which revolves around dedicated communities of traders who collaborate, share ideas and borrow effective strategies from a broad selection of previously successful traders.
This type of strategy can prove worth its weight in gold when trading as a digital nomad, especially if you want to make the most of your travels and create the optimal work-life balance.