What's the average salary of a Forex trader? (With skills)
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Foreign exchange trading is one of the most complex skills in global finance, requiring a significant amount of attention to detail and focus on changing market trends. To succeed in the field, it's critical to prepare for making a profit or loss from even minor shifts in market behaviour. Understanding the details of this career, including its average salary and key skills, may help you decide if Forex trading is the right career for you.
In this article, we detail the average salary of a Forex trader, explain what a Forex trader does, review steps to become one and list some skills to develop in this role.
What's the average salary of a Forex trader?
The national average salary of a Forex trader is £41,899 per year. As is the norm in the finance industry, this figure can vary significantly based on location. Wages in metropolitan centres such as London may be significantly higher than in smaller cities and towns. A Forex trader's compensation package can also vary based on their specific portfolio of work, the profitability of the accounts in their portfolio and the size of funds that they manage. A substantial part of a trader's income may come from the commission, which is the fee that they charge for managing their clients' trades.
What is a Forex trader?
A Forex trader is a finance professional who performs a similar job to a stockbroker, but with a particular focus on currencies from around the world. By investing in and divesting from the right currencies at the right time, Forex traders generate profit for their clients. They do this by closely tracking financial trends and global events, which allows them to better understand how a currency's value might change in both the short and long term.
Being a Forex trader isn't necessarily always a full-time profession. Although trading independently on a full-time basis is possible, many aspiring Forex traders trade part-time at first, just to build up some side income. In addition to working independently, another way in which traders can ensure that they remain financially stable is working for a larger financial institute.
How to become a Forex trader
If you have an interest in becoming a Forex trader, there are different options for how to begin your career in this field. You can follow these steps to become a Forex trader:
1. Take an interest in stocks and currency
Developing an essential skill set as a Forex trader can be a long-term project. Being passionate about stocks and currencies can help you remain motivated to perform day-to-day trading duties, such as determining whether an account may become profitable or operate at a loss. A thorough understanding of market trends and behaviour can help you advance your independent career or impress your employer. By studying the markets for a while before applying for any roles, you can build the knowledge base that many employers desire.
2. Create your own portfolio
While Forex traders can benefit from having abstract knowledge of what may cause stocks to rise and fall, it's much more important for them to have practical trading experience. You can get this experience by starting your own fund and building a personal Forex portfolio. These funds may be as large or as small as you can afford and can provide you with practical experience of using your knowledge of the market to create a profit. This can also be an effective example to help represent yourself to potential employers.
3. Gain qualifications
Some experienced traders may not hire an applicant unless they have relevant qualifications. For example, these can include a degree in business or economics, or even something as simple as completing a short Forex course. Obtaining formal qualifications can improve your competence while helping you demonstrate to employees that you're dedicated to making professional progress. Personal motivation can be valuable to many employers in the field.
4. Apply for a job
Once you're confident with your skills and experience, you may consider applying for a Forex vacancy at a financial company. Although different companies have varying hiring processes, there are still commonalities between how they decide which applicants to hire. These typically include a competency-based quiz, an interview and an assessment of any work you've completed in the past, all of which can help the hiring manager better understand your potential and the impact that you may have on their company.
Essential Forex trader skills
To be an effective Forex trader, it's essential that you develop a broad range of skills. Here are some important skills for Forex traders:
Tracking dozens of data points is at the heart of a Forex trader's work. Being able to understand the value of currencies from around the world relative to each other as they remain fluid is a highly complex task. Being able to assess data and derive accurate conclusions can allow Forex traders to use their investments effectively. Noticing trends and understanding why currency values may change based on data can help Forex traders significantly improve their portfolios.
Related: How to become a data analyst
While various economic factors can change the value of different currencies, this can also result from different political and social factors. Significant political changes around the world can have a major impact on the values of multiple currencies. Forex traders and investors with a thorough understanding of the global social and political contexts can avoid the risks of such situations or even capitalise on their uncertainty.
As a Forex trader, you may often have a range of different clients all looking to maximise the value of their initial investment. This means that investors may question some of your investment decisions at points, leaving you to explain your logic. To properly present your investment decisions to your clients, it's important that you build up a range of communication skills and use them to discuss any advice you might have about clients' investment choices.
You may have a starting strategy for how to manage your investment and a milestone at which you are happy to sell and profit. It's important to remember to account for any risks involved with your strategy to preserve your mental stamina. For example, if you're surprised by a sudden change in one aspect of the market that depreciates a currency's value, this can affect your long-term strategy. Remaining calm and motivated through less relaxed periods can allow you to learn from mistakes by finding new opportunities.
Similar jobs to a Forex trader
If you're looking for another job in the world of finance, here are some positions that are similar to Forex traders:
National average salary: £58,964 per year
Primary duties: A trader has a very similar role to a Forex trader. The fundamental difference between the two is that a trader works with assets such as shares and commodities in addition to focusing on international currencies. The two roles can have almost identical skill sets, as their daily tasks are usually similar.
National average salary: £36,542 per year
Primary duties: A financial analyst primarily works with financial products. It's important to note that they rarely have a role in the trading of financial products. Instead, their focus is usually on finding trends and understanding the behaviour of financial products while allowing others in the organisation to make investment decisions. Aspiring financial analysts may focus on developing expert-level financial modelling and strategic thinking skills.
National average salary: £54,873 per year
Primary duties: Investment managers make decisions about a fund's investments, working on its broader strategy and determining how to respond to market trends. This role typically has a significant amount of responsibility. An experienced investment manager can be key to the success or failure of a fund. Excelling in this role usually requires confidence, determination and self-motivation. The ability to work well under pressure and coordinate with a team can also help you succeed as an investment manager.
National average salary: £39,805 per year
Primary duties: A purchasing manager is a finance and business professional who may help companies or clients purchase goods to resell or use within the organisation. They may work with suppliers and manufacturers daily to negotiate prices and create purchase orders. Commonly, they also oversee the work of buyers and purchasing agents. The role of a purchasing manager is usually a senior position within a company, which means it often requires strong management and leadership skills.
Salary figures reflect data listed on Indeed Salaries at the time of writing. Salaries may vary depending on the hiring organisation and a candidate's experience, academic background and location.
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