Anyone looking to become a foreign exchange trader will need only an online brokerage account and access to trading capital. Historically, a person could only become a foreign exchange trader by working for large institutional banks; however, the Internet has made it possible for aspiring foreign exchange traders to open an online brokerage account with as little as $250 US Dollars (USD). Although there are not many requirements to become a foreign exchange trader, many things contribute to success in this profession and should be considered by those who wish to pursue it.
A foreign exchange trader must have a thorough understanding of the economic factors that play a role in strengthening or weakening the currency of one country relative to others. These economic factors determine the exchange rate between two currencies and can change quickly. A country’s unemployment rate, gross domestic product (GDP), and the interest rate of its national bank all play a role in the currency’s exchange rate. Good foreign exchange traders diligently study and track this data in order to make informed — and hopefully profitable — trades.
Especially for a new trader, being active in the foreign exchange market is a high stress endeavor. Market movements often translate into gigantic losses or huge profits. Trades are usually carried out in substantial volumes in order to gain significant profits since the average value shift is quite small. Anyone aspiring to become a foreign exchange trader should begin by securing his or her personal financial status before venturing into this highly volatile market, and strive to be up to date with current events affecting the marketplace.
After gaining success and generating positive returns for oneself, one may decide to trade the capital of additional investors. Trading capital from outside investors is a huge responsibility and anyone looking to become a foreign exchange trader will need to be extremely detailed and have great interpersonal and communication skills. There are also numerous securities laws and regulations that will need to be upheld in raising, securing, and managing investor capital. These regulations vary depending upon the country and state where a trader is located.
In order to be successful in trading investor capital in the foreign exchange market, an aspiring trader will need to stand out from the other traders in the market. One way to accomplish this is through gaining financial certifications that demonstrate a trader’s proficiency in a particular subject matter. The Chartered Financial Analyst (CFA) qualification is one designation that can help professional foreign exchange traders distinguish themselves as experts in the marketplace.
Overall, becoming a foreign exchange trader requires adequate capital, intuitive thinking, and thorough knowledge of the foreign exchange market. Although one can become a foreign exchange trader fairly quickly and easily, making a profit takes diligent study, hard work, and patience.
