What Does Being a FX Trader Really Entail?

In 2016, the daily turnover in the foreign exchange market was more than 5 trillion dollars. That’s a huge amount of turnover every single day.

And this year trading volumes have been rising sharply.

With such huge amounts of money being traded, there are opportunities to make some serious money through FX trading. But what exactly does it involve?

Read on as we take a look at exactly what being an FX trader really entails.

What Is FX Trading?

FX is an abbreviation for Foreign Exchange. You will also see it called Forex trading.

In essence, it is a market for the trading of currencies. FX traders swap one currency for another. Their aim is to take advantage of the fluctuating currency exchange rates to make a profit in their trades.

Since most trading is done over the internet, FX trading takes place 24 hours a day.

What Does It Involve?

FX trading involves expecting one currency to rise or fall against another and buying or selling that currency to try to make a profit.

The most common currency pairing in FX trading is EUR/USD.

The pair will have two distinct prices: a bid price and an ask price. You always buy at the higher price and sell at the lower price. The difference in prices is called the spread.

For example, the selling price might be 1.16565 and the buying price is 1.16578. Since you are buying at the higher price, you need the exchange rate to rise until the selling price becomes higher than the original buying price. At this point, if you sell, you make a profit.

What Is Required to Be an FX Trader?

There a number of things you will need if you want to become an FX trader.

The first is some money to trade with. The good news is that you can start with as little as a few dollars, although the profits will be very small.

You will also need to find a reliable broker. There is a huge choice, so do your research before you choose one.

Another good idea is a practice account to help you get the hang of trading without risking your money.

How Can You Be a Successful FX Trader?

One of the best ways to be successful is to get hints as to when it’s a good time to open a trade.

These are known as signals, and there a range of services that can provide you with these signals. Some are free, some are paid, and some are generated by software. Choosing a good signal provider can be the key to success as an FX trader.

Are You Looking for the Best FX Signals?

If you’re thinking about becoming an FX trader then you’ll probably be looking for a signal provider.

We offer verified reviews of the very best free signal providers to help you choose the perfect match for your needs. And we also have a ton of great content to help you make a success of your FX trading on our handy blog.

So feel free to take a look around the site. We know you’ll find our information incredibly useful in your FX trading.

This article was put together by our in-house financial experts.