When it comes to forex trading, one of the most commonly asked questions is: what is the right age to start?
Early Adulthood: Building a strong foundation
While there isn’t one right answer to this question, it’s safe to say that in most jurisdictions, one must be at least 18 years old to open a live account.
While age probably matters less than expertise, knowledge, budget, or goals, there are different stages of life that one could consider when starting a trade. Early adulthood is when one usually sees people kicking off their trading journey.
During this period, most traders are likely to have fewer financial obligations and more time to dedicate to learning how to trade. It’s an excellent time to start expanding foundational knowledge. Traders can become familiar with key concepts in trading, namely technical and fundamental analysis. These are crucial to making informed investing decisions. Risk management is also important to safeguard your funds.
Mastering these concepts earlier on in your investing career provides you with the time needed to build experience and know-how. Use this time to engage in as many forms of trading-related education as possible, be this books, blogs, e-guides, webinars, podcasts, etc.
Sign up for a demo account to gain practical trading experience and to learn how to conduct critical forms of analysis. Work on your mental resilience too, seeing as trading will require a significant amount of patience, discipline, and emotional restraint.
Focus on how to become a better investor rather than chasing risky transactions, which, at this age, you’re probably unlikely to be able to afford.
Mid-20s to 40s: Balancing career and trading
From the mid-20s to the 40s, people typically establish their careers, gain more disposable income, and achieve greater financial independence. For someone looking to engage in trading as a side hustle or to generate an additional income stream, this is probably an ideal time to do it.
With age also comes a higher level of patience, and emotional control so trading based on data rather than feelings becomes more likely. This period is also one where flexibility becomes a vital requirement, especially if balancing a job and a family. Opting for forex trading allows you to leverage the convenience of the forex market’s 24/5 operation, letting you choose the trading times that best fit your schedule.
40s to 50s: Investing for wealth preservation
After the age of 40 and into the 50s is when you’re more likely to see investors using trading as a means of supplementing their income. They may also use it as a secondary income stream. People in this age bracket are typically less willing to incur high levels of risk. They seek to preserve their wealth for retirement rather than risk losing it unnecessarily.
At this stage of life, a trader usually has a far more robust trading psychology and emotional security. They also have the necessary investing skills built up over time. Engaging in ongoing learning remains vital to keep one’s capabilities honed. It’s important to keep up to date with any changes in technologies or the markets.
Further, more mature traders also have the ability to think ahead. They adopt a longer-term approach to investing by building a strategy that focuses on consistent results over time. This approach is often coupled with more capital to invest.
In contrast, younger traders often tend to chase short-term gains. They give little thought to the long-term sustainability of their strategies. This can lead to impulsive decisions and higher risk-taking. Younger traders may focus on immediate gratification, which may result in inconsistent outcomes. In some cases, this can even lead to significant losses.
60s and Beyond: Trading in Retirement
From the 60s onwards, and post retirement, trading usually offers a way to actively engage in the financial markets. However, approach it with caution at this stage to protect your savings from unnecessary risk.
For those in their 60s and beyond, trading is typically not driven by the goal of making a fortune overnight. Rather, it is a way to generate gradual wealth, while focusing on low-risk strategies, and having realistic expectations.
Is it ever too late to start trading?
It’s clear that every stage of life offers something in terms of potential trading success. While budget, emotional maturity, skills, patience and expertise may differ, opportunities to generate returns exist, regardless of how old you are.
Before you get started, ask yourself the following questions:
- How much time do you have to dedicate to trading?
- How much risk are you comfortable taking on?
- Do you have the budget available to engage in trading?
- Do you have the ability to engage in some form of consistent learning to remain skilled and knowledgeable?
- Do you know what trading strategy will suit you best?
When it comes to trading strategy, various investing styles exist, each defined by specific traits that cater to different types of traders.
The most popular trading styles are:
Swing trading
- A swing investor adopts a short to medium term approach to trading. Positions are held for several days to weeks. While overnight or weekend gap risks exist, there is no need to dedicate hours of time each day to monitoring transactions.
Scalping
- A scalper is someone who thrives in a high stress environment. This is because scalping entails executing hundreds of trades per day, with positions held for a few seconds to a few minutes. Transactions are terminated before the trading day concludes. This is a strategy for someone who has a significant number of hours per day to dedicate to market analysis and monitoring positions.
Day trading
- Most similar to scalping, a day trader will also enter and exit multiple days frequently throughout an investing day. Positions are closed before the end of the trading day. Like scalping, this strategy suits those who can monitor their positions throughout the day and react promptly to market-moving events.
Position trading
- Unlike scalping or day trading, position trading is a much longer-term approach to investing. A position investor typically keeps positions open for anywhere from several weeks to several months, and in some cases, even years. They seek to capture substantial price moves over extended periods. The holding period is usually dependent on the trader’s strategy and also market conditions.
Depending on what stage of life you are in may dictate what trading style will suit you best. Remember, adopting a style of trading has less to do with how old you are and more to do with where you are in life as far as career, responsibilities, disposable income, tolerance for risk, and the time you have to dedicate to trading.
What is also important to keep in mind is that regardless of what type of trader you become, adopting an effective risk management plan is also critical to protecting your capital, whether you are in your 20s, 40s, 60s, or in retirement.
Ensure you have a robust understanding of trading and ensure you engage in continual learning to be constantly updated.
Trading with T4Trade
T4Trade has established a robust reputation, appealing to traders in many countries across the globe. T4Trade ticks many of the boxes we’ve mentioned in the article in terms of regulation, reliability, learning opportunities, and more. Other reasons that traders choose T4Trade are that it offers competitive spreads, flexible leverage, and quick and easy withdrawals and deposits.
T4Trade also provides multiple account types to choose from, meeting the demands of traders at all levels. Its online platform, MT4, is user-friendly and feature-rich, offering an optimal investing experience.
T4Trade’s multilingual customer support is top-tier and on hand 24/5 to help you with any pressing trading-related queries. Further, T4Trade offers access to high-end educational resources to help you become a better investor.
Disclaimer: This material is for general informational and educational purposes only and should not be considered investment advice or an investment recommendation. T4Trade is not responsible for any data provided by third parties referenced or hyperlinked in this communication.
