So you want to become a forex trader, right? In this post, you will learn:
- who or what makes a forex trader
- what you need to do to become a forex trader
- what it takes to become a successful forex trader
Table Of Contents
Forex Trader Definition
A forex trader is any person or woman who takes part in speculating in the forex market to make money.
It can be anyone, from a stay-at-home mum to a brick layer to a person working in a large investment bank or financial institution.
There are 3 main types of forex traders:
- government and central banks
- large banks and financial institutions
- retail traders and speculators
Believe it or not, governments and central banks get involved in the forex market. When they do it, it is mainly to intervene on behalf of their currency. This may come about due to:
- market instability
- over valuation
- under valuation
Central banks can buy their own currency to give it support against other countries or sell their own currencies to weaken it against other currencies.
Large banks and and financial institutions are also involved in trading the forex market. These companies are well equipped with millions in their trading accounts and they are the big sharks in the forex market ocean. The forex traders that work in these are called institutional traders. They are trained systems and the risk managment process to use and they follow it to make money fro the company that they trade for…which means that most of them will not be trading their own money.
Majority of us come under the retail traders and speculators. In this group are the professional traders as well as the not-professional traders.
A professional trader is a trader that make his money by trading the forex market. That money pays or buys his house or mortgage, car, bills and food. That’s his job.
The not-so professional traders are those traders that still have other jobs abut once in a while will try their hand in forex trading.
Requirement To Become A Forex Trader
To become a forex trader in large trading firms like banks or hedge funds etc most likely will require some sort of finance degree or unless you really have some really good trading track record of trading your own money, this can open doors for you to become a forex trader for big financial instuations that also speculate in the forex market.
Now, for most us, we are the speculators, the ordinary mama’s and papa’s traders.
The requirements to get started as a forex trader are not difficult:
- first get educated…I’m not saying get a university degree. What I mean is learn about forex trading. There are lots of free resources online, like this forex trading course, where you learn about forex trading.
- once you’ve learnt about forex trading, then open a trading account with forex broker. The process also is really simple. And then you can try demo trading for a while to get familiar with the forex trading platform and how to place trades etc and apply some of the forex trading strategies that you’ve found. Once you’ve built your confidence in the demo trading then you can find your live account.
- Just because you are trading with a live account does not guarantee that you will make millions in forex trading. Far from it. Success in forex trading takes time but most important of all, you need to develop a really good mindset in managing emotions and trading risk.
- Experience the bad and the good of forex trading. You will never know this until you do it yourself.
The Risks Of Being A Forex Trader
- Every day, traders are losing and making money in the forex market, and its no wonder that they call it “the zero sum game”.
- Stress. Be willing to put up with stress and high pressure environment.
- Sleepless Nights. You can stay up all night waiting for that perfect trading setup to form that you’ve been waiting for weeks and months for it to happen before you can buy or sell and now that it is near, you don’t want to miss it.
- Relationships Issues. You friend may call you a nerd, weird or something else, zebra knows what…You marriage may suffer or fail. Your GF or BF can leave you because you will be spending too much time in front of the computer. Believe me, my wife calls my laptop, my second wife!
The Benefits Of Being A Successful Forex Trader
Nobody gets into trading currencies just to lose money.
We all want to make money…lots of it.
Many retail forex traders will struggle with managing risks. This is the number one killer of forex trading accounts: not managing trading risk properly.
However, if and when you do succeed the benefits are huge:
- work for yourself: no bosses to report to,no rush hour traffic to content with, no crappy work mates to put up with daily.
- you can travel and trade forex from anywhere in the world as long as long as there is an internet connection
- doors will open for you to make a choice to trade other rich people’s money. Talking millions of dollars here.
- Stellar forex trading records and track can open doors to big hedge funds and financial institutions that involved in forex trading who may want to hire you. This means larger trading account to trade with and the potential to make a hefty sum of cash if you are paid a % of the profits you make in a given timeframe, like monthly, 6monthly or yearly.