How to become a forex trader (with skills and definition)
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When working in financial markets, one of the most important tools for making a profit is the varying level of the exchange rate between currencies. Forex traders leverage this variance as a means of increasing their profits and making the most of international events. If you have an interest in this role, learning how to become a forex trader can help you decide your next career step. In this article, we discuss what a forex trader is, how to become a forex trader and forex trader skills.
What is a forex trader?
A forex trader is a member of staff who works in a financial institution with the responsibility of investing in international currencies. Forex traders have managerial responsibilities depending on their seniority in an organisation. In some cases, forex traders work independently, trading on their own rather than as part of a company. Some forex traders trade a range of financial products in addition to currencies. This includes trading stocks, shares and shorts.
How to become a forex trader
Learn more about how to become a forex trader below:
1. Complete the right A-levels
The first step in the process of becoming a forex trader is completing the right A-levels. A-level is the first stage in your education in which you specialise in a specific skill set. When seeking a career as a forex trader, consider A-levels such as economics, politics and business studies. Each of these subjects teaches you specifically about the concepts relating to forex trading, informing you about the fundamentals of foreign exchange rates and financial markets. Knowing what affects the price and supply of goods such as currency is important for the role.
A significant benefit of completing these A-levels is that you have evidence of understanding these subjects. Foreign exchange trading companies rely on members of staff making the right decisions at the right time as a means of maximising their profits. Having this understanding from a young age means companies trust your understanding of the principles. Over time, these skills become second nature to a candidate, which means they perform to a high standard when forex trading for the company.
2. Consider a degree
At the next stage of the process, consider undertaking a university degree. The ideal degrees for a potential forex trader include management, accountancy, economics and business studies. Each of these degrees directly relates to the way finance works and improves a candidate's understanding of the way financial markets change in accordance with world events. In addition to learning more about the theory of foreign exchange, students experience financial markets with a range of projects and tasks. Candidates develop a better understanding of the most complex ideas in financial markets and have a better insight into the industry.
Depending on your personal preferences, this stage in the process is optional. Completing a university degree is beneficial for building your knowledge and expertise in the area at an early stage in your career. A degree takes at least three years to complete, so those with less of an interest in formal studying benefit from following alternative routes in their personal development. If you have an interest in formal study and writing reports about financial markets, attending university is an ideal method of developing your skill set for a role in a foreign exchange trading organisation.
3. Trade independently
When foreign exchange companies hire new members of staff, they seek people with high, existing standards of work in the trading industry. As someone new to forex, you don't have a track record of employment in other countries. Start building your own portfolio. This entails using your own money and investing in foreign currencies you see as having potential for an increase in value. Make a note of all of your transactions as a means of tracking the success of your own strategies and having documentation to provide to interested companies.
Trading independently builds your experience of working in a practical trading setting. Having a university and A-level education is ideal for creating the foundations of your knowledge and trading with your own portfolio is an ideal method of cementing this information in reality. In some instances, markets behave differently from the way economic theory implies due to external factors. Experiencing this before working in a foreign exchange company means you know some of the risks of trading and learn from your mistakes before managing finances for an external client. Companies value experience with trading highly.
4. Consider an apprenticeship
An apprenticeship is a situation in which someone new in an industry works for a company whilst working towards a further qualification. This is an ideal solution for someone seeking a position working in foreign exchange. When completing an apprenticeship, an aspiring forex trader works closely with existing members of staff, ensuring the new recruit makes as few errors as possible and ensuring they build consistency and quality in their work. In their time outside the workplace, apprentices complete classroom learning and work towards a qualification that has a direct relation to forex trading.
One significant benefit of completing an apprenticeship is the fact that you spend time working within a forex trading company. One of the most important parts of building a career is having a strong network, and having a strong network relies on knowing people across the industry. Focus on talking to and befriending as many people as possible throughout the apprenticeship period. Aside from building your network, you benefit from having a better time in the apprenticeship, as you know the people working around you and have far better social interactions in the workplace.
5. Follow current events
One of the most significant factors affecting the value of international currencies is the political landscape around the world. This refers to both natural catastrophes, international relations and the policies that governments put in place. Each of these affects the nature of the economy in that country, the value of the currency and the relative value of currencies around the world. Foreign exchange traders profit from changes in the difference between the values of different currencies. Tracking current events and assessing the potential direction of policies around the world provides insight into these changes.
Following current events is beneficial for a candidate in the job application process. In some interview settings, companies ask candidates questions about the current global context. This develops the company's understanding of the candidate, teaching the business more about the way the candidate understands the world around them and financial markets. As someone with experience in studying global markets and politics, you benefit from answering this question effectively and demonstrating your suitability for the role.
6. Apply for roles
When you have a strong level of understanding, a financial portfolio and a high degree of experience, start applying for forex trader roles. Consider applying at the company you completed an internship with, as you have existing contacts at the company and they know your skills before an interview. Using your network is ideal for the job search process, as you ask senior members of staff in a range of companies about job opportunities and ideal ways of improving your application.
Applying for roles requires a CV and cover letter. When writing a CV and cover letter, read the job description and person specification thoroughly. As you notice select keywords and important skills in the job descriptions, include them in your supporting documentation. Some companies use automated keyword filters as a means of sifting through CVs and cover letters, so featuring keywords means you have a better chance of passing this process. This improves your chances of a successful application, as you get through automated systems and in front of an interviewer more consistently.
Forex trader skills
Forex traders use a range of different skills in the workplace, including:
Problem-solving: finding investment solutions in changing markets
Data analysis: understanding narratives through data
Leadership: leading fellow staff in investment strategies
Communication: writing and presenting information clearly to colleagues and managers
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