Affiliate marketing and forex trading are two of the most commonly recommended ways to make money online. An affiliate marketer promotes products to earn a commission, while a forex trader bets on the price movement of one currency in relation to another. Should you choose between affiliate marketing vs forex trading, or go with another online business model like local lead generation? In the following article, we take a closer look at each business model and break down the differences so you can decide which option is right for you. Plus, we highlight one common trick to watch out for that relates to both businesses!
What is affiliate marketing?
Affiliate marketing is a digital marketing strategy where a business outsources marketing efforts to third-party marketers who promote the business’s products and services to earn an affiliate commission. Affiliates are not the product owners themselves, but act as advertisers for the product and brand. An affiliate marketer uses their own custom affiliate link to track marketing efforts that count towards their earnings. Because it’s an advertising strategy that is performance-based, affiliate marketing is immensely popular among brands. According to TrueList, 80% of brands use an affiliate program as part of their marketing efforts in 2023. Therefore, there are countless brands you have access to and can choose to promote as an affiliate marketer.
Get affiliate links through an affiliate network
Some affiliate marketers get their affiliate links directly from the brand they want to work with. However, it’s most common to access brands and affiliate links through an affiliate network like Amazon Associates or CJ Affiliate. An affiliate network connects businesses who want to outsource marketing with affiliates looking to earn a commission for providing those valuable marketing services.
Promote your affiliate links in front of an audience
Affiliate marketers use various digital channels to promote affiliate links in front of potential customers. According to TrueList, blogging is extremely popular for affiliate marketing, with nearly 65% of affiliates using it in their affiliate marketing strategy. Beyond blog affiliates, affiliate marketers also promote through:
What is forex trading?
Forex trading, or foreign exchange trading, is the action of trading foreign currency pairs to earn money by taking advantage of the price fluctuations between two currencies. The foreign exchange market is the largest financial market in the world, trading over $6.6 trillion worth of currency value every day. A forex trader predicts moves in the market using global news and data and then takes a position by betting on one currency’s performance over another’s.
Forex traders trade using currency pairs. A currency pair is the value of one currency being quoted against another. For example, the Euro and US dollar pair (EUR/USD) is the most popular currency pair, comprising nearly a quarter of all forex transactions. The EUR comes first, so it is the base currency, and the USD is second, meaning it is the quote currency. You would buy the EUR/USD pair if you believe the price of the Euro is going to rise against the US dollar, and you would sell if you thought the Euro was going to fall compared to the US dollar.
The bid/ask spread
Retail forex traders, as in anyone not working for a bank or government agency, can access and trade on the forex market through a broker like OANDA or IG Markets. Most forex brokers nowadays don’t charge you a commission for each sale, but instead make money on the spread between the bid and ask price. On the forex broker’s trading platform, each currency pair will be quoted with a bid price, or the price you can sell the base currency for, and an ask price, which is the price you can buy the base currency for. The difference between the bid and ask price is the bid/ask spread, which is where the broker makes a bit of money each time you buy or sell a currency pair.
Start affiliate marketing with $100 or less
You can get started with affiliate marketing for between $0 to $100, depending on which channels you choose to promote through. Signing up for an affiliate network to get your affiliate links doesn’t cost you anything and you can use free marketing channels like YouTube to create content and promoting products through. If you want to go the blogging route, you can buy a shared hosting package with a 1-year free domain name for around $3/month on an annual subscription.
You should have at least a few thousand dollars to start forex trading
Technically, you can start trading forex with as little as $100, as that is the common minimum account balance required by many major brokers. However, The Balance recommends starting with at least $5,000 if you actually want to generate reasonable revenue that will compensate you for the time you put into trading forex. That’s because you rarely want to risk over 1% of your account balance per trade. If you only have a $100 account, then best practice says you should only risk $1, and in that scenario, you could only make a few dollars for such a small bet. However, with $5,000 or more, you could safely risk $50 on a trade and could then reasonably earn $50 or more if the trade goes well, making it much easier to generate adequate income.
Affiliate marketing is highly competitive
Affiliate marketing has low entry barriers and has become a highly competitive industry. The level of competition you’ll face directly depends on which niche you choose to promote products in. According to EasyAffiliate, the Lifestyle and Wellness, Technology, Personal Finance, and Pet niches are some of the most popular, and therefore most competitive. Affiliate marketers usually get traffic to their affiliate links by getting their content to rank well organically for high-volume keywords. Because affiliate marketing success is largely based on how much traffic you can drive to your affiliate product offers, everybody tries to rank their content for those high-volume keywords, making competition fierce.
Competition against major global banks
As a retail trader, forex is competitive in the sense that you’re just a small fish in a massive ocean. According to AlibabaCloud, retail forex traders are only estimated to make up about 10% to 12% of all trades on the forex market. Large commercial and investment banks conduct the majority of trading on the forex market on behalf of their major clients like governments and massive multinational corporations. Therefore, they control the market and the direction it goes. Retail forex traders are just along for the ride and have no ability to control the market like the banks do.
An alternative low competition online business model
If high competition is not something you want to deal with, local lead generation could be a better online business option for you. Local lead generation involves building a website to rank in a top spot on Google for a particular business niche and location, and then selling the valuable leads it generates to businesses for up to $2,500 every month. Therefore, with just a few clients in your local lead generation business, you could pull in a 6-figure annual revenue stream. According to Oberlo, there are 32.5 million small businesses in the US market alone. That’s a lot of potential customers in an up and coming digital industry!
Quality of available resources for learning
There are many great free and paid options to learn
There are loads of resources available online to learn affiliate marketing, from free information in YouTube videos to high-value courses like Affiliate Lab or Wealthy Affiliate. However, as is typical in marketing and especially in affiliate marketing, you need to watch out for self promotion of courses and promotion of courses by affiliates just looking to earn a commission. There is a ton of great information out there you can use to learn the skills needed to be successful in affiliate marketing, but just make sure there are solid, authentic reviews to back up the claims if you go for a paid course.
Be cautious of fake forex gurus
It can be very difficult to determine the authenticity of forex trading content. There are many so-called forex “gurus” all over the internet showing an incredible lifestyle that they created seemingly from forex trading, when in reality they are just a forex affiliate for some training course or recommending their own course making their income from sign ups instead of actual forex trading. There are certainly some solid resources online for forex like BabyPips School of Pipsology, but there is also an enormous amount of content from people who failed at forex that are just trying to monetize the basic knowledge they obtained.
Most affiliates don't earn a full-time income
Your potential earnings as an affiliate marketer are based on which niche you choose to promote in and where you get your affiliate links. For example, if you promote products as an Amazon Associate, you’ll only earn 3% to 4% commission for most product categories. However, with other affiliate networks like ClickBank, you can earn 70% or more commission on the products you sell. Despite the potential for high commissions, a study by Influencer Marketing Hub found that most affiliates make less than $10k/year from their efforts.
If your account is large enough, you can make some serious money with forex
Your earning ability as a forex trader is tied to the amount of money you have in your account to make trades. For example, if you start with a $1,000 account and average a healthy 5% return each month, you’ll make around $795 in profit for the year. However, with a $100,000 account averaging the same 5%, your profit for the year will be something around $79,585. If you start forex trading and you have a sizeable account balance, you could earn some serious profits taking relatively low-risk trades, but if you trade forex with very little money and take big risks to try to grow your account fast, you'll probably blow your account pretty quickly.
Scale your affiliate business as much or as little as you like
Affiliate marketing is an extremely flexible hustle that you can fit into your schedule whenever. If you’re relying on organic content to drive traffic like with a blog or YouTube channel, you will want to publish content consistently because the search engine algorithms value that, but you can pretty much do your content creation work at anytime. Even if you elect to leverage paid advertising to extend your promotional reach, you can set your marketing campaigns to run automatically and make adjustments when you have time if needed. Affiliate marketing is a suitable option for those looking for either a side hustle or full-time business, as you can scale it up and down as needed.
Trade forex from wherever, whenever
The foreign exchange market is open for retail trading 24 hours a day, between Sunday at 5pm EST to Friday at 5pm EST. That's why day trading is becoming more popular. You can log into your trading account from your laptop or phone and work anytime during those trading hours. Because of this flexibility, traders can easily join courses like The Daily Traders and Prosper Trading Academy to boost their knowledge of day trading.
If you leave your forex trading account without trades for an extended period, usually over 12 months, most brokers will charge a monthly inactivity fee for holding your funds in the account. However, outside of that, there is no penalty for taking time off forex. You can trade forex as little or as much as you like, whenever you like, from wherever you want in the world.
Automation and passive income potential
Active affiliate links can generate income for years
When you create blog or other social media content for the purpose of affiliate marketing, it usually stays on the internet until you decide to take it down. As long as the affiliate program remains active, you can generate income from content published with affiliate links for years.
Although there is no autopilot money making software for affiliate marketing, there are several great affiliate marketing tools you can use to help automate the work. For instance, you can add a chatbot to your affiliate marketing website to help handle inquiries about your affiliate offer even if you’re away. You can also use a tool like ClickMeter to track conversions from multiple campaigns and affiliate links in one place.
Forex trading robots can make you money while you sleep
Algorithms account for around 20% of currency trading volume. It’s very common for traders to automate forex trading by programming trading robots with their strategies. In fact, trading forex with robots is preferable because it helps prevent you from cheating your strategy and letting your trades run longer than they should, which is how many forex traders lose a winning position or even blow their accounts. MetaTrader is the most popular forex trading software that is compatible with most brokers. Using MetaTrader and its MQL programming language, you can easily automate your forex trading strategy and make adjustments as necessary.
Risks and challenges
Paid advertising doesn’t guarantee results
With a pay-per-performance model like affiliate marketing, there is no guarantee you’re going to get compensated well, if at all, for your efforts. Furthermore, many affiliate marketers use paid advertising to extend their reach and collect valuable audience data. However, just because you pay for advertising doesn’t mean it’s going to generate the results you’re looking for. It’s very common for affiliates to dump hundreds or even thousands of dollars into an advertising campaign, only to discover that the affiliate offer isn’t in demand or their advertising strategy didn’t work out.
Tread carefully when trading on margin
Trading on margin is common practice in forex and allowed my most major brokerages. Margin trading is borrowing money from the brokerage so you can increase your forex trade size and profits substantially. However, if the trade backfires, you’ll also lose substantially more money. Many traders have learned the hard way just how easy it is to lose thousands of dollars in a matter of seconds from making a bad margin trade.
Many affiliates quit too soon
According to Entrepreneurs Unstuck, 95% of new affiliates fail and quit affiliate marketing before they see success. Because of several variables like high competition and the time needed to attain true expertise in the industry, it’s very difficult to be successful in affiliate marketing. Furthermore, Awin discloses the average conversion rate for an affiliate marketing campaign at an underwhelming 0.5% to 1%! If you stick with affiliate marketing for a couple of years, there’s a good chance you’ll see success in the long run, but it's a bumpy road to get there.
Most retail forex traders lose money
According to Nairametrics, publicly available brokerage data shows that between 73% to 95% of retail forex trading accounts lose money. Therefore, the vast majority of retail forex traders are losing money in the forex market. Forex is especially difficult because of the psychological aspect of risking money. You need to be a special type of person to be a forex trader because most people let their emotions get the better of them, which can be catastrophic in the fast-paced high-risk, high-reward situations required with forex.
Watch out for the forex affiliate marketer
As mentioned, most forex gurus you’ll find on the internet are not legit, and many of them are actually making their money from forex affiliate marketing instead of online trading. The reason for choosing a life of deceit instead of just trading for real? A forex affiliate program can be extremely lucrative without the risk of losing money required for actual forex trading. There are many trading platforms offering an affiliate programme, but let’s look at Admiral Markets for the sake of example. According to the Admiral Markets affiliate program page, you can earn up to $600 just for referring one client! On top of that, you can also earn a 25% revenue share for life on the fee the company generates for trades made by the referral client. Therefore, forex affiliate marketers can make a killing by promoting forex-related content with affiliate links, without any genuine success trading forex.
There are many great online business opportunities you can choose from. Whether you stick with deciding between affiliate marketing vs forex trading, or find a better opportunity, now is the best time to get started working towards your dreams. If the millions of other people working online with their own businesses can do it, so you can you!