In recent times, we have seen a clear trend of consolidation emerge in the financial marketplace. This was embodied recently by Japan’s regional banks, which consolidated their gains momentum amid incremental growth and relatively low volumes of trading activity.
This, of course, is a trend that is being reflected in the commercial world, where entrepreneurs are increasingly keen to reduce costs and adapt their business models to achieve more sustainable margins in a challenging economic climate.
Such an outlook can be detrimental to entrepreneurs, however, while it also ignores the fundamental fact that you need to take calculated risks when accumulating starting capital to launch your venture in the first place.
The benefits of liquid investments: How to trade currency and raise capital
With this in mind, there is a pressing need to seek out flexible and low-cost funding options that strike the ideal balance between risk management and returns. One of the best options is to avoid traditional loan agreements that encumber your venture with debt and force you to sacrifice equity, and instead consider embracing liquid investments that can quickly build your working capital.
Take the example of forex trading with FxPro, which exposes you to an extremely liquid market, flexible derivatives and minimal costs. Armed with the right knowledge and patience, you can quickly accumulate wealth and a stream of income that can be invested and then reinvested into your business.
Here’s how to achieve this: –
Use leverage efficiently
Forex is a leveraged product, which means you can begin trading with a much larger amount than you actually own. It allows you to make forex trades worth a lot more, creating greater profits from small starting amounts, but also greater losses.
For example, if you used 50:1 leverage, you could profit fifty times more than the amount you start with, but also lose fifty times more if the trade goes against you. Therefore, it is advisable that you do not use more than 10:1 leverage when trading forex, to protect your finances when trading.
This enables you to benefit from the liquidity and margin-based returns that define the marketplace, while also ensuring that you implement a stringent, risk management strategy.
Stick with safe trades
If your main aim from forex trading is to raise a certain amount to help set up a business, then there’s no point making risky trades. Stick with the safe options, even though it may take longer and even require higher investment to prove successful.
Opting to trade currencies such as the Japanese yen and Swiss franc, which are traditionally safer currencies less at risk of big swings, can be most beneficial. The U.S. Dollar is also considered to be a source of strength and durability, although rising interest rates and Trump’s supposed preference for a weaker currency could change this outlook in the near-term.
You should also avoid volatile currencies such as the pound and the Euro at present, as the spectre of Brexit and wider geopolitical concerns have caused huge uncertainty and establishing a growth ceiling for these assets.
Set clear goals
One reason many traders end up in trouble is that they let their emotions take over and don’t know when to stop. If they are on a winning streak then they may continue to make trades, risking more of their finances when it’s not necessary.
When your main aim is to raise capital for a startup, you should set out clear goals of how much you are willing to risk each day, how much you need to earn and by when. Once your target is met, stop trading to avoid losing too any more and risking the future of your venture before it has begun.
Seek expert advice
Forex trading is not something you can pick up overnight, in order to be successful, it can take time. Using expert help and advice can ensure that happens, whether you seek out expert traders online or use the services of a brokerage. Stay in control and don’t risk too much and you should be able to raise enough starting capital for your startup.