I recently happened to attend a meetup with friends this festival season. An interesting topic that came up was about generating some side-income.
One of the friends who works in technology sector told us that he had sufficient free time at hand and hence was considering between the two options of freelancing and trading to generate extra income.
This comparison got everyone’s attention. Everyone knows a skill or two which can be used to generate some extra money. And many people have heard stories about how some people make extra money in stock markets via regular trading.
So which option is better?
To be fair, based on your interests, skills, and time available, you can generate passive income through either or both. But how do these compare?
To start, let’s address a fundamental question – What is trading?
Trading involves the buying and selling of various assets, such as stocks, commodities, currencies, and more. During these transactions, investors and traders predict the performance of specific companies to generate profits. Although trading carries inherent risks, it also presents an opportunity to generate substantial income for those who can do it well.
But is it as easy as it sounds? No. Not at all.
In fact, in India the regulator SEBI released a detailed study of the Individual traders’ Analysis of Profit and Loss in Equity Futures & Options (F&O). The result show that a whopping 89% Traders in lose money in trading F&O segment. To be fair, this isn’t surprising as we all know that very few traders genuinely make any money.
And while the potential for higher returns earned in a short period of time makes trading one of the most widely preferred choices for side income for many, let’s not forget that it involves risk and developing a sustainable expertise (to generate money regularly) takes time. It is not easy and that is the reason why 89% traders don’t make money as per the study mentioned above.
If you are interested in trading, the very first step is to correctly learn the skills required for doing trading in the markets. This is like trying to learn how to use your axe before you go to cut a tree. You need to know how to hold the axe, at what angle to use the iron blade of the axe, which trees to choose, and similar thing. You really need to first gather some theoretical knowledge and learn how to use the technical tools that are required for trading, whether it is trading in stock markets or whether it is trading in commodities or. Once this part is done, only then you should consider setting aside a small amount of money to begin apply what you learnt to real trading.
In other countries where it is legally allowed, people also get into predicting the outcomes of sports events. At its core, this involves analyzing and predicting the outcome of sporting events. Successful investors in this field employ various strategies to maximize their returns while minimizing risks. These strategies involve careful analysis of statistics, team performance, player abilities, and other relevant factors. Remember the movie Moneyball? In such scenarios, the data analysis takes research a step further by utilizing statistical models to identify patterns, trends, and probabilities utilizing tools such as Aviator bet. This allows investors to better analyze data and potentially increase their chances of making profitable returns in the long run. Another essential aspect here is carefully evaluating the odds and then using bet sizing strategies to minimize losses during cold streaks and maximize profits during winning streaks. In these, sizing platforms like leon.bet/en-in can provide valuable resources and assistance in managing such investments
On the other hand, freelancing is comparatively more predictable.
The freelancers or independent contractors, offer their services to clients or businesses on a project-by-project basis. Unlike traditional full-time employment, freelancers are not bound by long-term contracts with a single employer. Instead, they work independently and are typically hired for specific tasks or assignments. The flexibility of freelancing allows individuals to work for multiple clients simultaneously and choose projects that align with their skills and interests. The relationship between freelancers and clients is often facilitated through online platforms or direct negotiations. Freelancing provides individuals with the opportunity to manage their own schedules, choose the projects they want to work on, and potentially work from anywhere with an internet connection.
So while one can choose between the two as both Trading and Freelancing offer unique opportunities and potential to generate passive income, you need to pick what works best for you. There is nothing wrong with trading, but the possibility of losses is high (at least that is what the data says). It is no doubt tempting to be lured by potential of huge returns, but it isn’t that easy or common. Comparing this to freelancing, where you can hit the ground running. Any existing skill that you have gained from your education or hobby can be turned into a freelancing source of income.
For most people looking to generate side income by choosing between trading or freelancing, I would suggest the latter as it has a higher probability of success. But if you really want to decide it on your own independently whether to go for freelancing or start trading to generate second income, then choose carefully depending on your investment goals, risk tolerance, and time management skills.