Affiliate marketing and forex trading are two popular methods to make money online. Affiliate marketing involves promoting other people’s products to earn a commission, while Forex trading is the simultaneous buying of one currency and the selling of another. Both affiliate marketing and forex trading you do not require any inventory. Should you choose affiliate marketing or forex trading?
This article will compare affiliate marketing vs forex trading from various aspects, including their business model, earning potential, ease of start and their risk and rewards. We will also share the skills and knowledge required to for success in both business models.
What is affiliate marketing?
Affiliate marketing is a business model where you earn money by recommending other people’s products to your audience. Affiliates earn a commission for each generated sale by their own marketing efforts. Commissions earned by affiliates can either be onetime commissions or recurring commissions depending on the affiliate product being promoted. Affiliate marketing is a performance-based advertising strategy that is really popular among brands and business owners. Therefore, as an affiliate you have access to millions of brands that you can choose to promote covering various niches in the world.
Get affiliate links
As an affiliate you can get affiliate links by joining affiliate networks like CJ Affiliate, Impact, Amazon Associates, ShareASale or Clickbank just to mention a few. You can equally get affiliate links directly from brands that you want to work with. Affiliates use their own custom affiliate links to track marketing efforts that count towards their earnings.
Promote affiliate links
There are many strategies to promote affiliate links out there, but blogging has been considered to be the most popular and promising for affiliate marketing. Additionally, email marketing is also considered to be more fruitful when promoting affiliate offers. These two when combined they can skyrocket you affiliate earnings for long term success.
Other ways to promote affiliate links include:
- YouTube videos
- Social media platforms like Twitter, Quora or Pinterest
- Paid advertising like Google ads or FB ads
- Review sites
- Paid ad networks like Propellerads, Adsterra etc.
What is forex trading?
Forex trading also known as foreign exchange, involves the buying and selling of currencies in the foreign exchange market with the aim of profiting from currency price fluctuations. Forex trading is the largest financial market in the world with a volume of about $7.5 trillion a day according to Bloomberg. If you compare that to the $20 billion a day volume that the New York Stock Exchange trades, you can easily see how enormous the Foreign Exchange really is.
It operates 24 hours a day, five days a week, due to its decentralized nature. Trading sessions include the Asian, European and the North American markets, each with its peak trading hours. Market participants include banks, financial institutions, governments, corporations and individual retail traders.
Currency Pairs
In forex trading, currencies are traded in pairs, where one currency is exchanged for another. Currencies are traded through a broker or dealer. For example, the Euro dollar and the US dollar
(EUR/USD) or the British pound and the Japanese Yen (GBP/JPY). The first currency in the pair is called the “base currency,” and the second is the “quote currency.” In the EUR/USD pair, the Euro (EUR) is the base currency and the US Dollar (USD) is the quote currency. If you believe the Euro will rise relative to the US Dollar, you would buy EUR/USD and if you expect the opposite, you would sell it.
Leverage
Leverage is a fundamental aspect of forex trading that allows traders to control a larger position size with a relatively small amount of capital. For example, some Forex brokers offer 200 to 1 leverage, which means that a $50 dollar margin deposit would enable a trader to buy or sell $10,000 worth of currencies. Similarly, with $500 dollars, one could trade with $100,000 dollars and so on. While leverage can amplify gains, it also increases the risk of substantial losses. It’s essential for traders to use leverage cautiously and have a risk management strategy in place. Brokers are compensated for their services through something called the bid-ask spread.
The Bid/ask Spread
The spread is the difference between the bid and ask price. Nowadays, most forex brokers do not charge you any brokerage fee or commission for each sale generated, but instead make money on the spread between the bid and ask price. On the online forex trading platform, each currency pair will have the bid/ask spread. Each time you buy or sell a currency pair the broker will be compensated for their services through the bid/ask spread. The bid is the price at which you (as the trader) will sell the base currency for and the ask is the price at you will buy the base currency for. The bid is always lower than the ask price. As a retail forex trader (anyone not working for a bank, corporation or government agency) you can access and trade the foreign exchange market through a broker like IG Markets or FXCM.
Getting started: Affiliate marketing vs Forex Trading
Affiliate marketing starting cost
Getting started as an affiliate marketer can cost around $0 to $100 depending on the marketing strategy that you want to use to promote affiliate products. If you consider the blogging system you will need to pay around $3.00 for web hosting in a platform like A2hosting. Additionally, if you consider growing an email list and send emails to your list, you can use an email platform like Getresponse or Systeme which have great free plans for a beginner like you. You can also promote affiliate products by creating YouTube videos and add an affiliate link in the video description.
Forex trading starting cost
You may think that getting started as a forex trader would cost you a ton of money. The fact is, compared to trading stocks, options or futures, it doesn’t. Online Forex brokers offer “mini” and “micro” trading accounts, some with a minimum account deposit of $100 or less. Babypips recommends starting with at least $1,000 for a micro account and at least $10,000 for a mini account. That’s because the best practice says you should risk 1% of your account balance per trade. By applying a great risk management with $1000 you can safely risk $10 and for $10,000 account you can safely risk $100 on a trade. If the trade goes as you calculated you can generate reasonable profits and you can eventually earn a viable income with more successful trades.
You can open a demo account for free with most Forex brokers. The demo account allows you to learn about the Forex markets and test your trading skills with ZERO risk. You should try demo trading for at least one month before putting your money on the real account.
Availability of quality Learning Resources
There are many helpful resources available online to learn affiliate marketing, from free information in blogs, eBooks and YouTube videos to high value courses like The Affiliate Site System. With affiliate marketing courses you can readily learn what affiliate marketing strategies are proven to work and generate affiliate commissions rather than wasting much of your time in the trial & error phase trying to figure it out yourself.
If you consider taking a paid course the two mentioned courses above are the only ones that I personally recommend. There are a lot of self-promotion courses out there with low quality value hence you should be cautious of your hard-earned money and do you own research before paying for any course. To reduce your burden of research, here is an article that I wrote showing you the best affiliate marketing courses out there.
When it comes to forex trading there are a lot of claims of being scammed by fake gurus. It is easy to fall a victim to these fake gurus and you should not be quick to part with your money and give it to strangers who you claim to increase your trading account balance in short period of time. Always remember that Forex trading is not a get rich quick scheme. The truth is that even expert traders with years of experience still encounter periodic losses. Forex trading is a skill that takes time and there are no short cuts to forex trading, anyone who tells you otherwise wants to scam you.
Anyway, there are a lot of helpful resources online if you want to become a forex trader from success stories of traders and quality YouTube videos to courses like the Traders Academy Club. If you consider learning to trade on your own, here are some of the best Forex trading channels on YouTube that I recommend. They include: Rayner Teo, Adam Khoo, Karen Foo, Hannah Forex and the Inner Circle Trader.
Earning Potential: Affiliate marketing vs Forex Trading
Affiliate marketing earning potential ($1k – $500K per month)
Affiliate marketing is a huge market, almost every business in the world has an affiliate program.
Some affiliate marketers earn a few hundred dollars per month, while others generate a substantial 6 or 7 figure incomes. Here is a brief income category for affiliate marketers
Beginners earn around $0 to $1000 per month.
Intermediate earn around $1k to $10k per month.
Advanced earn between $10k to $100k per month
Super affiliates earn over $100K per month.
Your earning potential as an affiliate will depend on various factors, including:
- Niche selection – choosing a profitable niche with high demand can significantly impact your earnings
- Audience size – More traffic generally leads to more earning opportunities.
- Affiliate programs – Some affiliate programs offer higher commissions than others.
- Marketing skills – Your ability to create compelling content, use effective marketing strategies and optimize your campaigns can influence your earnings
- Traffic sources – Different traffic sources can yield varying results such as organic search, email marketing, social media and paid advertising.
- Consistency in creating valuable content and maintain your marketing efforts over time can lead to increased earnings.
Your earnings potential ultimately depends on your dedication, strategy and the factors mentioned above.
Forex Trading Earning Potential
Forex trading can offer a wide range of earning potential, but it also carries a high level of risk. You can trade and turn a small account into 6 or 7 figures but the odds of you pulling it off are slim to none. The only best way to make a huge sum of money is to have a large deposit account balance. For example, let’s say you have a trading strategy that makes 70% a year.
On a $1000 account, that’s $700 per year.
On a $10,000 account, that’s $7000 per year.
On a $100,000 account that’s $70,000 per year.
On a $1M account that’s $700,000 per year.
If you apply proper risk management with a large account you can make serious money. Alternatively, if you have a small account and you are trying to take a huge risk on you trades you can easily blow up your account. Only a lucky few could get away with it because 99.99% of traders who attempt it will blow up their accounts.
Here are some factors that influence your earning potential in forex trading:
- Skill and knowledge – your level of expertise and understanding of the market plays a crucial role.
- Capital investment – the amount of money you invest can directly impact your earnings.
- Effective risk management strategies
- Trading style (day trading, scalp trading, swing trading or position trading)
- Psychological factors – Emotional decisions can lead to impulsive actions and losses.
- Market conditions and volatility.
Many traders experience losses and success in forex trading often requires continuous learning and adaptation to changing market conditions. Earnings in forex trading can vary widely, from significant profits to substantial losses and there is no guaranteed monthly income.
On how much money you can make through forex trading read this Rayner Teo’s article on that same topic.
Competition level
Affiliate marketing has a low barrier entry with a high competition level from the already existing affiliate marketing blogs or websites out there. It will be difficult as a beginner to outrank these blogs since they have a high domain rating and new websites take time to rank on Google search results page.
As a retail forex trader there is a high competition level from large banks, governments and large commercial companies which do influence the movement of currency pairs due to the large pool of money that they trade with. In forex trading, retail traders can never influence the price movement of a currency pair. With hardly any barriers to entry, anybody can open up an account, deposit some money, and trade forex from the comfort of their own home.
Advantage and Disadvantages
Affiliate Marketing Advantages/Benefits
Affiliate marketing offers several rewards and advantages. They include:
- Low Startup costs – You can get started with a website or social media profile and basic marketing tools.
- Passive income – Once you’ve set up your affiliate marketing strategy, you can earn commissions while sleeping or focusing on other things.
- Work flexibility – you have the flexibility to choose your niche, products and marketing methods that align with your interest and expertise.
- Diverse income streams – You can promote products and services from various affiliate programs.
- No customer support or inventory required.
- Performance based earnings – the more sales or leads you get, the more commissions you will earn.
- Scalability – as you gain experience and expand your reach, you can scale your marketing efforts for more income.
- Networking opportunities – you can build relationships with other affiliate marketers and industry professionals, leading to collaborative opportunities.
Affiliate marketing disadvantages/risks/challenges
Affiliate marketing can be a profitable business model, but it also comes with certain risks and challenges. Here are some of the risks that affiliates are likely to face.
- Affiliate marketing is competitive, with many marketers vying for the same audience.
- In some niches, there may be a saturation of affiliate marketers making it harder to find untapped opportunities
- Affiliate marketers need to comply with various regulations including GDPR in Europe and other regional laws.
- Promoting low quality or fraudulent products can damage your reputation.
- The rise of ad blockers can hinder affiliate marketing efforts, making it harder to reach your target audience.
- Affiliate payment may be delayed.
- Algorithm changes by search engines or social media platforms can disrupt traffic flow.
- Your income relies on the affiliate program you promote. If they change their terms, shut down or reduce commissions, it can significantly impact your earnings.
- Not everyone achieves significant income, and it may take time to see substantial results.
Forex Trading Advantages/Benefits
Forex trading offers several advantages for individuals and investors:
- No clearing fees, no exchange fees, no government fees, no brokerage fees.
- High liquidity
- No middlemen – currency trading allows you to trade directly with the market responsible for the pricing on a particular currency pair.
- 24-Hour market -which allows traders to choose their preferred trading time.
- Low transaction costs – Forex brokers typically charge minimal or no commissions.
- High Leverage – you can control a larger position size with a relatively small amount of capital.
- Forex offers a wide range of currency pairs to trade.
- Highly transparent market which enables traders to make informed decisions.
- No central exchange -this decentralization prevents market manipulation and provides equal access to all traders.
- Availability of risk management tools like stop loss and take profit orders which limit potential losses and secure profits.
Forex Trading disadvantages/risks
- High leverage carries significant risks, including the potential for substantial losses.
- Emotional stress – traders often deal with anxiety, fear and greed which can lead to impulsive and unwise trading choices.
- Market volatility can lead to sudden or unexpected losses.
- Complexity – understanding the forex market and its various factors that influence currency prices can be challenging.
- Lack of centralized regulation has exposed traders to potential fraud and scams on various platforms.
- There are no guaranteed profits in forex trading.
- Information overload.
- Overtrading.
Choosing the right path
Success in affiliate marketing often requires dedication, ongoing learning and the ability to adapt to changing market conditions. It’s also crucial to provide value to your audience and build trust to ensure long term success in affiliate marketing.
Not everyone achieves significant income and it may take time to see substantial results. Nonetheless, for those willing to put in the effort and stay committed, the rewards can be substantial.
Successful forex trading requires education, a well thought out trading plan, discipline, risk management and continuous learning to navigate the complexities of the market effectively. In forex trading, your profit is the result of accurate calculation and losses are inevitable. Remember, forex trading is not a rich quick scheme. This business is always strategy, patience and a sense of proportion.
Success Stories
Affiliate marketing success stories
Michelle Schroeder Gardner has a personal finance and lifestyle blog called “Making Sense of Cents.” She has built a substantial income stream of over $100,000 per month through affiliate marketing and other blog monetizing methods. Michelle shares her personal finance journey and she recommends products in her niche like personal finance apps, courses and investment platforms. Her success showcases the potential of niche focused affiliate marketing.
Pat Flynn is a well-known affiliate marketer who started his Smart Passive Income blog and podcast. He has shared his affiliate marketing journey openly with his audience and he also has an affiliate a marketing course that will teach you the very strategies he uses to promote affiliate products. His success lies in creating valuable content and recommending products that he genuinely believes in. Pat has generated millions of dollars of affiliate earnings over the years.
Forex Trading Success story
According to Michael Covel, in his Trend Following, Ed Seykota turned $5000 trading account into $15,000,000 over a year period.
Bill Lipschutz, a former Salomon Brothers trader, is known for his remarkable success in the forex market. He reportedly turned a $12,000 inheritance into $250,000 in just a few years of trading. Lipschutz emphasizes the importance of risk management and having a great trading strategy that you follow.
Wrapping Up
Affiliate marketing involves promoting products or services and earning commissions on sales, while forex trading involves buying and selling currencies for potential profit. Affiliate marketing offers a low cost, flexible way to earn income, making it accessible to beginners. It relies on content creation, marketing skills and building trust with an audience. However, success can be gradual and largely depends on marketing efforts.
On the other hand, forex trading boasts high liquidity and the potential for significant gains. Yet it carries a high risk of losses, it requires in depth market knowledge and can be emotionally challenging. Ultimately the choice between affiliate marketing vs forex trading depends on one’s risk tolerance, expertise and preferred income model. Understanding the difference between these two options is essential for individuals seeking to enter the world of online income opportunities.