The foreign currency exchange market is one of the most lucrative and prospective industries in the world, and with the daily circulation reaching almost 4 trillion dollars, you can rest assured that with knowledge, practice, and a bit of luck you can get your piece of the monetary cake.

But what is the forex market exactly and how do you start to build your career trading currency? Here are some key guidelines you should follow in order to make money of currency exchange.

Acquire the Necessary Skills

There is a certain skillset that either comes the hard way as you struggle to learn on the job, it can come rather easily if you put in the time to read through important articles and find out what are the best practices in the industry.

First of all, examine the exchange rate currencies. The currency you want to sell will give you insight into which currency you should buy. So, make sure to examine both the base (selling) and the quote currency (buying) in order to leverage your chances of returning the investment.

Currency exchange rates are quoted in pairs, meaning if an AUD/EUR quote is 1.20, you will receive 1.20 Euros for each Australian dollar you sell. Being a constantly fluctuating market means you’re always on the job and in the loop of these fluctuations, as anything from natural disasters to economic and political changes can significantly impact the quotes.

Secondly, you need to have a strategy. In order for your transactions to be profitable, you will have to buy the currency you expect will increase in value by using the currency that is expected to decrease, meaning that if you buy Iraqi dinar, for example, and you expect it to rise, you can purchase an amount of the currency and if it goes up by even .25, you will have made money.

Be sure to track all economic changes in countries using the currency you are trading, in order to predict fluctuations. For instance, middle-eastern countries that have been affected by the controversial “Muslim ban” might see their currency quotes plummet, but those who have been excluded from the ban, like Iraq, will have their currencies skyrocket.

The Job Itself

After you have read and re-read the guidelines and researched best forex practices, it is time to dive into the world of currency exchange.

First of all, obtain enough cash in your local currency as you will need the money to convert into international currencies you wish to trade. You can acquire cash by selling some assets like stocks, mutual funds, bonds or by taking money out of a savings account.

Next, you will need a currency exchange broker and in most cases, individuals place their transactions through a broker agency. You can easily find online brokers that offer novice-friendly platforms for currency transactions.

Be sure to find a broker that offers low spreads, meaning that forex brokers, unlike traditional stock brokers, make money off a spread – the difference between a currency’s selling point and another’s buying point. For example, a broker who buys a US dollar for 1.25 YEN but then sells it for 1.50 YEN has a spread of .25 YEN.

Be sure to research all broker choices and determine if they are registered at the Futures Commission Merchant and regulated by the Commodity Futures Trading Commission, as a prerequisite for creating your brokerage accounts.

Place your transaction with the broker while tracking currency fluctuations. Do not purchase too much of a certain currency and stick to investing no more than 5 to 10% of your total balance on any currency trade.

Be sure to create your stop-loss orders. These orders automatically sell off your trade once the currency hits a certain price. This is a crucial part of forex trading, and it limits the risk and the amount of loss if the currency starts plummeting.

Keep track of your transactions, the price a certain currency was paid for, the price at which you sold a currency, the date of the transaction, etc. You won’t have to collect this information yourself as brokerage firms will send you annual reports.

Currency trading is not for the faint of heart, as it requires a lot of skill, attention, some intuition and plenty of time and resources in order to become profitable for individuals. But if you follow these guidelines, and make some smart moves choices, you can become one of the 30% of individuals who have made it in the forex market.