Introduction
Free trade involves opening up the borders of nations so that they can be able to trade freely without any restrictions. Free trade can be quite profitable to the individual who knows how to use this circumstance to their advantage with the aim of making money from it.
Step 1
The first tip and idea in free trade is to follow foreign exchange market trends between the two countries. Since free trade involves free flow of goods and services between countries, the likelihood is that the transactions will have to be conducted using one currency, and the currency level will give you a slight idea about the performance of your home currency when compared to that of the foreign currency.
Step 2
This could in a large way impact the profits that you make, and knowledge of this will help you succeed in free trade.
Step 3
The second option is to know more about the country which you intend to trade with. You should always follow the trends in the country that you are importing from or exporting to, as the slightest news could change the dynamics in your favour or against you. For example, political turmoil in a foreign country is bad for investment, and this always affects free trade, but a positive economic growth could encourage investment and this will impact free trade.
Step 4
Another tip that will help you succeed in free trade is to use the major currencies as opposed to obscure currencies while trading. The major currencies usually include the US dollar as well as the Swiss Franc and the Euro, while an example of a smaller currency is the Kenya Shilling. Therefore, if a Kenyan is conducting free trade with people in neighbouring countries, it is advisable to use a strong currency as this will help you to standardize the transaction, as opposed to using the many different local currencies in the different countries as this could be disadvantageous for the trader.
Step 5
You should also follow the legislation in the various countries when taking part in free trade as this will help you to make more profits, as well as to desire which commodities you should trade in the foreign country. For example, electronic products in most developing countries are not usually taxed at all, and a trader who is interested in free trade in such a country should consider such commodities. It is also important to note which commodities have been banned from being exported, for example, it is illegal to export wood from some African countries, and this knowledge could help you to know which commodities to import or export in order to make profit from free trade.
Tips
You could also try to find out which services are in demand in a particular country with the aim of determining whether you can export your services as this could be profitable for you.
Sources and Citations
Though the concept of free trade is very controversial in some countries as some people argue that it could lead to the flooding of the markets by mediocre goods from other countries, and that services that are outsourced can sometimes be cheaper leading to unemployment of the citizens in a particular country. However, despite these disadvantages, free trade has a lot of potential, and the individual who studies the market can earn a lot of profits from this kind of trade.
