The forex market is an extremely difficult one in which to work. It is highly competitive and extremely volatile. The industry is also very fast-pace. It is constantly in motion being a 24-hour market with trades made constantly. In order to trade efficiently and immerse yourself effectively you must be aware of the evolving patterns and trends, such as internet trading. Yet, before you begin all this, you must understand the basics of forex trading.
So, what exactly does the forex trader do? In short, the trader sells and buys foreign currencies. His responsibility is to interact with other traders promoting the trading of positions. By trading these positions he is looking to make a profit or a loss with the sale, preferably a profit. Whether he actually attains this depends entirely on his knowledge of the market, his strategy and his ability to keep to his plan of action.
Many traders work independently, but to begin they must purchase an account with a brokerage. The brokerage or trading company can be either public, which is a more corporate agency, or private. Nowadays you may also find ‘on-site’ or online brokerage companies. This is due to the rising popularity of the online forex trading market – an industry where traders can trade via their laptops anywhere in the world, providing there is an internet connection.
Reading this, one may assume that this job is rather simple and easy. However, it is far more complicated and tiresome when examined more closely. The forex trader is required to conduct copious amounts of research in order to develop a trading strategy or plan of action on which to trade. Without this strategy they will be trading on a whim, which may work for a little while but ultimately will lead to several losses and reduced capital.
One may be wondering what this research entails. The research is analysis or examination of economic and financial data from the current market to several months prior. You will be required to deconstruct the trends and patterns which occur so as to determine how you will trade. Once you have analysed this information and incorporated it into your strategy, you should be able to trade successfully. However, trends do change and it may be necessary to alter and adapt your strategy several times as the market changes. Initially you may have a supervisor or mentor to help assist and guide you, but you will soon have to learn how to work unsupervised.
Contrary to popular belief, there is no need for formal qualifications in the forex industry. Although some training in finance and economy may be useful, it is not necessary. In fact, one may find the basic instruction in a ‘how to’ book which can be bought off Amazon. It is advised that one register with various online forums to gain further practical knowledge in the forex industry. It has been seen that the discussion posts within these forums are invaluable to the beginner – much more useful than the ‘tips to trading’ e-book.
In conclusion, forex trading is a highly lucrative occupation but it must be approached with caution. To be successful you must be prepared to work hard, be ruthless and not quit until the trade is won.