Start Your Forex Career Off In Winning Fashion
Living in a world that is increasingly interconnected, globalized, and competitive has given rise to the rapidly growing field of currency trading. Forex traders buy and sell currencies all day long, with the goal of maximizing their profit from those transactions. Forex traders work in many different markets around the world and are constantly exposed to a variety of risks which differ from market to market. Forex traders have a number of skills in order to be successful at their job including an ability for quick problem solving, strong analytical skills for research, and most importantly for managing risk. Forex traders are unique in the financial service market in that they have to take on different roles during the course of their careers. Initially, forex traders must learn to be a market maker which involves either understanding an existing product or creating additional products to be sold. After learning a product or understanding the execution process, they must then build up their trading account with actual funds and begin trading with them. Once a forex trader is well versed at trading, managing risk and generating profits from trades then he/she can begin to make more educated decisions about where their career will take them.
Forex traders can generally fall into two categories: retail traders and institutional traders. While these two categories of traders have many similarities, they differ greatly, as well. Most retail traders begin with a small account before building up to larger, more profitable ones. Retail forex traders are often trading for the first time and need to be able to understand real world currency markets. Retail forex traders must also have a keen eye for market trends which helps them identify when a trend is on the rise or growing. When selling a product in the market, most retail traders will have risk management skills and some experience in risk management from their previous jobs. As their success grows, retail forex traders can begin to use their knowledge of financial markets and through doing so improve their analytical skills and knowledge about trading. This will ultimately lead them to a more profitable career in the future.
Institutional traders generally have much larger trading accounts, as well as more experience. Institutional traders also generally take on a role in the market, such as being employed at a futures broker or investment bank, where they are responsible for managing and trading with their firm's money. These professionals are highly skilled and must have an extensive understanding of risk management when trading with so much of their firm's money. However, these professionals are not expected to trade with the funds themselves but instead they often form teams of individuals which then become responsible for their own risk management. In order to begin trading in the institutional space, one must go through a short training period and then be able to demonstrate success by making money for their company. Without this success, institutional traders are often told that they are too risky and do not have what is necessary for the job. Once a forex trader has demonstrated that he/she has the ability to make educated decisions about risk, they can begin making larger trades and therefore gain more experience.
Forex traders can fall into different roles depending on their experience and where they expect to be in their careers.
Once an individual deems him or herself ready for a career change, they have freedom over where they will go next in the financial service industry. Before looking for a new job, forex traders should be sure that they have a solid understanding of risk management and how it applies to the futures market. This is a crucial step in deciding what type of position to apply for next.
Now that you have an understanding of the industry and what it takes to succeed as a forex trader, you can look at some job opportunities available to you:
The need for foreign exchange trading is apparent in the rapid growth of retail trading over the past decade. Traders now choose currency pairs based on their own needs and preferences however, global financial markets are still very active and provide traders with many opportunities to buy or sell currencies. As the economy grows, so does the need for currency trading and therefore trade volume in foreign exchange. For example, when a country's economy is expected to do well and their currency is expected to rise, forex traders will buy those currencies believing that they will increase in value over time. Forex traders also often sell currencies of countries where the economy is failing. They generally do so by selling their currency and then waiting until they can buy it back at a lower price. Many forex traders find success by investing early in markets with outsized potential as well as those which are experiencing times of economic turmoil. There are also many ways to make money from currency trading such as fixing the exchange rate of a currency pair, arbitrage, market making, trading on margin and lending money.
Forex traders are often required to be licensed by their government before they can trade for themselves. There are many different types of licenses that a trader needs depending on his or her level of experience and what type of trading they should do. There is the fundamental license which gives access to all markets but allows traders with no experience to trade only market making products. The trading license allows traders to deal in all types of products while the commercial license allows traders to trade a specific product, such as stocks or futures. There are only six countries which have the licensing needed to trade currencies which include: United States, Japan, Australia, Canada, Switzerland and Great Britain.
To begin trading forex you must first be able to understand global financial markets and how they relate to currency markets. There are many different tools for traders that give them knowledge about market values, volumes and open positions that are available in the market. One type of tool is called Market Makers
This is software that spreads a trader's risk across a number of buyers and sellers based on thresholds set by the trader. These tools can also be used to set up automatic trades or programs that allow traders greater control over their trading.
Another type of tool is called Electronic Trading Systems. These are online platforms and platforms are offering a growing array of trading products, such as forex, CFDs or derivatives. For example, an online platform will offer online trading and wealth management services. There are many different types of these systems that can be used for currency exchanges such as MetaTrader 4 (MT4) or the Spot Price Exchanges which include the Japanese Exchange Market (JEX), Australian Stock Exchange (ASX), Chicago Mercantile Exchange (CME) and London Metal Exchange (LME).
Conclusion:
Now that you have an understanding of what to expect from your future as a forex trader, you can look at some job opportunities available to you:
Forex traders are often required to be licensed by their government before they can trade for themselves. There are many different types of licenses that a trader needs depending on his or her level of experience and what type of trading they should do. There is the fundamental license which gives access to all markets but allows traders with no experience to trade only market making products. The trading license allows traders to deal in all types of products while the commercial license allows traders to trade a specific product, such as stocks or futures.