Affiliate Marketing vs Forex Trading: What's the Difference
The forex industry offers a host of different ways to earn money even if you’re not a trader. One of the most popular ways to generate revenue (or even turn forex into a full-time source of money) is to start a forex affiliate marketing business.
Many people confuse the two terms forex affiliate marketing and forex trading. This article will clear the confusion and decide whether you want to become a forex affiliate (also known as an IB, Introducing Broker) or a trader.
Let’s get started.
What is Affiliate Marketing?
Affiliate marketing is a performance-based marketing strategy, meaning the activities of individuals or companies (affiliates) offering products or services for sale are managed, organized, and performed.
In this case, the affiliate promotes a product or service through a specific identifier or link and gets paid if they make a sale or get a qualified lead. The very essence of affiliate marketing is to outsource and utilize affiliates' strength and knowledge base to ensure timely traffic and purchases for a merchant.
If you want to learn more about affiliate marketing, check out this article.
Understanding the Concept of Affiliate Marketing
Essentially, affiliate programs, both for the merchants and the affiliate, are a situation where there are no losers. The merchant gets more exposure, brand recognition, and, ultimately, sales, while the affiliate gets paid for spending time advertising the merchant’s products or services.
This is a win-win situation for all parties involved. Businesses can acquire new customers and grow, while affiliates get to promote their endorsed products or services and earn some passive money in the process.
The Benefits of Affiliate Marketing
Affiliate marketing offers a multitude of benefits for both merchants and affiliates:
- Low overhead: Affiliate marketing is a budget-friendly promotional method, as retailers do not incur any expenses beforehand since they only settle the costs when a sale has taken place.
- Scalability: Affiliate networks offer access to the extensive pool of affiliates that help the merchants scale their marketing activities to a wider audience.
- Targeted promotion: Affiliates can use their niche expertise and their “already-won” audience to promote offers that are relevant to their followers.
- Passive income: For the affiliates, the prospect of earning a cut from every sale or lead closure tagged with their unique tracking link or code often provides a great opportunity for passive income.
- Flexibility: Viewers summarizing a few features of affiliate marketing may find the most advantageous feature is that it allows them to promote virtually any type of goods or services.
How Does Affiliate Marketing Work?
The affiliate marketing process typically involves the following steps:
- Merchant recruitment: Merchants (businesses or brands) search for affiliates in the marketplace or other platforms to help them sell their goods or services.
- Affiliate onboarding: Affiliates join the merchant’s affiliate program and provide the necessary details while choosing products and services to market.
- Unique tracking links: The merchant formulates a distinct link or code and supplies the affiliate, through which sales or leads as a result of the affiliate's marketing activities can be traced.
- Promotion and conversion: The affiliate advertises the merchant’s goods or services through other websites, social networks, email marketing, content creation, and similar methods. Whenever a consumer accesses and clicks on the affiliate’s unique link and buys something or performs a certain action, the sale or action is credited to the affiliate.
- Commission payout: The merchant manages, controls, and verifies the sales or leads brought into the merchant by the affiliate and pays the affiliate the commission that is agreed upon often on a monthly or transactional basis.
What is Forex Trading?
Forex trading or foreign exchange trading is a worldwide market that relies upon the trade of currencies. Traders engage in monetary exchange rate operations and profit from the changes in the prices of the currencies. The forex trade entails buying a currency and at the same time selling another to take advantage of the currency's fluctuations in value against one another.
If you want to learn about forex trading in-depth, check out this article.
The Basics of Forex Trading
The forex market is open for business 24 hours a day, five days a week where different traders are involved in buying and selling numerous currency pairs for example USD to Euro, Euro to British pound, or Japanese yen to Australian dollar.
In addition, traders analyze economic indicators, news, internal and external events, and trends to make the most weighted decision and to open a deal at the most favorable moment. There are trillions of dollars worth of transactions a day in the foreign exchange market which attracts both beginner and professional traders since excess liquidity prevails in the market.
The Differences Between Affiliate Marketing and Forex Trading
While affiliate marketing and forex trading may seem quite different on the surface, there are some key distinctions between the two:
Nature of the Business
Affiliate marketing is driven by performance-based strategies whereby agreed participants mainly affiliates promote and sell products or services of other advertisers/merchants sinecure.
On the contrary, foreign exchange trading is relatively a broader industry that entails buying and selling of currencies which involves speculating and determining forces if currency price changes with respect to factors, reasons, or other currency prices.
Income Potential
In affiliate marketing the potential of income generation is related to the number of conversions (either sales or leads) achieved.
As for forex trading, income-generating potential depends on the success of the trader in foreseeing movement in currency prices and taking advantage of them.
Risk Profile
Affiliate marketing does not entail several costs and therefore is regarded as a business model that exposes investors to low financial risks.
Whereas, forex trading requires a deep understanding of economic factors, market analysis, and risk management.
Skill Sets
While affiliate marketing is about content, marketing, and encompassing lead generation, trading in forex is broader involving more parameters such as the state of the economy, market structure, and control of loss.
Time Commitment
Affiliate marketing can be seen as a more passive income stream, in which the constant earning of commissions by an affiliate is in most cases recurring.
However, forex trading would require more of an all-rounded approach as not only is the trader fully engaged in the activities but also they take charge of the monitoring and decision-making in real-time.
Should You Become a Trader or an Affiliate?
The answer to this question depends on several factors such as your personality, business expertise, and skills.
Some people are introverted and find it a lot easier to sit in front of a computer for long hours, analyzing charts and developing their trader’s mindset. If you’re a complete beginner, you’ll need to spend long hours in front of a screen until you can become really good at trading.
All in all, these people are one-man armies and prefer to make money in silence. If this is you, then you should consider becoming a forex trader instead of an affiliate.
Extroverts, on the other hand, find it a lot easier to work in an open setting where they get to interact with other people and lead a team of employees.
If you’re an extrovert, then you should consider starting a forex affiliate or IB business. This business is all about finding contacts in the industry, going to industry events, making social media videos, building followers, and so on.
Your greatest asset here will be your outgoing personality and excellent communication skills.
Conclusion and Final Thoughts
Affiliate marketing and forex trading are two concepts that may seem different but share common traits and advantages for anyone willing to search out and take advantage of the demand for these services.
Since there are major differences between the two, your cross-incorporation needs to be well-managed to develop a profitable model. You don’t have to be an expert in the age-old commercial exploitation of the internet or a professional forex trader to appreciate this integration.
When properly managed, these two dominant forces will pave the way for growth, security, and expansion horizons that even the most tenacious investor would find satisfactory.
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