What is a Forex trader? Beginner’s Guide

If you have ever wondered what a Forex Trader does and what kind of work it entails, this post is for you. Forex trading is the act of exchanging one currency for another during trading hours. It is the most liquid market in the world, which means that the amount of forex traded is the most of any other market. It is also one of the only markets that never closes.

What is the forex market?

The Forex market has its peculiarities, but it is not so different from others, such as futures or stocks. In it are the currencies of multiple countries, and its operations consist of buying when the currency has a value over the dollar (for example) and selling when it changes. The percentage of change is measured in PIPs, and here you can find an article that we have written so that you know what it is about: What is a PIP in Trading?

How does the forex market work?

In a nutshell, forex trading is a form of arbitrage, and uses complex algorithms to determine the best market price for the forex pair (one currency over the value of another) based on market conditions.

An arbitrage opportunity occurs when a forex pair trades at a lower market price than it is supposed to, offering an opportunity to make a profit. The most well-known forex market in the world is the so-called London Forex Market (LIBOR). You can’t trade directly on the market, but instead trade on exchanges, much like eBay works, where a forex broker helps you find the best deals.

What does a Forex Trader do?

The forex market can be divided into two main activities: trading and managing trades. The first is the act of buying and selling forex at regular market prices during hours when others are doing the same, and the goal is to compete for a higher profit. The second is that instead of trading, you manage a forex portfolio. It is an ongoing process that involves trading psychology, setting your risk levels, hedging and market timing.

If you’re planning to start a career in forex trading, you’re going to need a solid background in finance, emotion control, and trade management, because it’s quite a specialized field. Here you can find our basic course to start trading: Stock Market and Trading Course for Clumsy

We hope to have helped you once again. May the market be with you!

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