The foreign exchange market, also known as the forex market, refers to the international trading of currencies that takes place 24/7, 365 days a year. Many people trade currencies not for a specific purpose like an overseas trip, but to profit from fluctuations in exchange rates.

Today, this can easily be done at home with nothing but some capital, an internet connection, and an online brokerage account. Those who can do it very successfully are able to make a career out of it.

Here is everything you need to know to potentially start your own forex trading career at home.

Forex trading career pros

If you are able to trade forex successfully, you can expect several benefits. These include working from anywhere you want, not reporting to a boss or completing tedious administrative tasks, and the freedom to work as much or as little as you wish.

Why trade forex?

There are other assets you could trade instead of forex to achieve the same benefits, such as stocks. However, the forex market has several advantages over other assets. These include:

• Being more liquid: This basically means that it is a much larger market with many more trades taking place. This makes it easy for you to buy and sell and makes it difficult for any single entity to have any meaningful or sustained influence on prices.
• Using leverage: This is essentially borrowing money to trade. If you deposit $500 in your account, a broker will usually let you buy $5,000, $10,000 or even as much as $15,000 worth of currencies. This can magnify your profits.
• Low commissions: Often, there are no commissions at all. Forex brokers make their money from the difference between the price to buy a currency and the slightly lower price to sell it, known as the spread.
• Many resources: The size and popularity of the forex market means that there is abundant information and research online to help traders.

Forex trading startup capital

Because you can use leverage, you do not need much money to start trading forex. There is, however, a minimum position size. This is the amount of currency you buy when you trade, usually denominated in US dollars.

Currencies are traditionally traded in ‘lots’ worth $100,000 each, but most online brokerages allow you to use micro-position sizes of $1,000.

Is forex trading risky?

Trading forex can be risky as well as rewarding. Leverage amplifies losses as well as gains, and currency prices are influenced by many different variables. These can include a country’s political stability, its economic growth, and changes to its interest rates.

Large, stable economies are more likely to see gradual improvements or declines in their exchange rates, while smaller ones can be highly volatile. However, all can be subject to unexpected shocks that could result in holders of their currency losing money quickly.

There is also the fact that trading does not suit every personality. Making money independently whenever you like from anywhere you like sounds attractive to almost everyone, but only a few ever succeed. To do so, they often have to fight their natural instincts, which can lead to many costly mistakes.