Currently, nearly £20 billion is loaned to approximately 1.5 million students in England every single year, while the total value of outstanding loans peaked at £182 billion in March 2022.

While this debt doesn’t have to be repaid immediately, it represents a significant financial burden. At the same time, students are also engulfed by the cost of living crisis, forcing many to seek out proactive ways of improving their financial circumstances while in higher education.

But could forex trading be a viable option for students? Here’s a breakdown of its advantages in the current economic climate.

The Rise of Forex Trading Among Casual Investors

There’s no doubt that forex trading has become increasingly popular of late, with a global daily trading volume in excess of $6.6 trillion.

Incredibly, this number was just $5.1 trillion in 2016, with this exponential growth also expected to continue for the foreseeable future at least.

What’s more, independent brokerages reported a dramatic increase in trading activity through the first half of 2020. This was largely due to the impact of the coronavirus pandemic and its associated lockdowns, which caused many to lose their jobs (or be enrolled on the furlough scheme) before seeking out an alternative source of income.

Overall, it’s estimated that forex trading volumes increased by approximately 300% between March and June 2020, as a slew of new accounts were registered online.

Both of these trends appear to have similar drivers too. For example, growth rates through 2020 (and since 2016) have been more pronounced in developing countries, particularly those in Eastern Europe, Southeast Africa.

Similarly, the growth in trading volumes is largely being driven by casual or part-time traders. This can encompass a broad and large demographic of people (including students), who look to combine forex trading strategies and activities with their full-time job or studies.

How Has Technology Empowered This Trend (and How to Prosper as a Trader)?

Of course, such individuals are only able to trade forex due to innovation and technological advancement, which has seen the introduction of online brokerage sites and made it easier than ever for individuals to trade in real-time.

One of the biggest developments has been in forex learning and tutorials. In the age of the Internet, it’s easier than ever for aspiring investors to access courses and information pertaining to forex, while brokerage sites themselves are packed full of historical insights and learning materials.

At the same time, most forex trading brokerage sites come with so-called “demo accounts”. These entities can usually be operated for up to six months when you register with a broker, while they expose you to a simulated, real-time trading environment without requiring you to risk your own cash.

As a result, you can experiment with different strategies without risk and finalise your forex trading plan more effectively, bridging the gap between theory and practice in the process.

When it comes to practical trading, you should note that modern forex trading is increasingly automated in nature. This means that traders are able to leverage a huge range of tools to execute orders and minimise risk, with the latter point particularly important when dealing with increased leverage.

For example, brokerage sites enable you to apply stop losses to your individual orders. A stop loss works by automatically capping losses once they’ve reached a predetermined level, which you can establish at the outset based on the value of your capital holdings, margin and outlook as an investor.

This way, you can automatically close open positions before they become too big of a financial burden, without having to log into your account or make a conscious decision in real-time.

Make no mistake; applying a stop loss to your account can make a huge difference, particularly in terms of safeguarding your capital and minimising the impact of leverage once the market starts to turn against you.

The Last Word

And on the topic of leverage, it’s crucial that you manage your expectations as a student and cap this in line with your margin and appetite for risk.

After all, some brokers offer leverage of up to 200x on certain trades, increasing your position size exponentially even on a small deposit. Of course, this can yield significant returns, although the losses can be equally pronounced should the market move against you.

So, we’d recommend capping your leverage at a conservative level, in order to strike the optimal balance between minimising risk and ensuring that you’re able to bank a small profit over time.

Ultimately, there’s no doubt that forex trading is more accessible than ever before, while the evidence suggests that it is being embraced by young and part-time traders on a mass scale across the globe.

So, it may offer considerable value to you as a student, so long as you take the time to learn about the market and its nuance and manage your expectations when it comes to the scale of your profitability.

Is Forex Trading a Viable Option for Students?