There are many ways in which you can attain success as a forex trader but in order to choose the right path for yourself, you need to consider a lot of aspects. This is because each trader is unique when it comes to trading goals and preferred trading style. Even the amount of risk that you can tolerate in the trading process needs to be considered while devising a sound trading plan. Your trading plan or forex strategy is very much like a route map, telling you about the direction in which you need to move to find the best opportunities in the dynamic currency market.
There are a lot of options to choose from and I want to make the selection process easier for anyone reading this article by sharing some valuable information that you need to know for becoming a successful trader in the forex market.
What Does a Typical Day Look Like for a Trader in the Forex Market?
The trading hours and schedule of each trader will be different depending on their trading style. Regardless of the trading style and timeframe you choose, you need to sign up for a trading account with a reputed and reliable broker. Because the trading conditions play a key role in your day-to-day trading experience as well as the trading results. You should also check the functionality and trading tools available on the trading platform they offer. MetaTrader 4 and MetaTrader 5 are the most preferred trading platforms among forex traders and MT4 is the most popular platform due to the simple UI and beginner-friendly features.
Now, the typical day of a trader also depends on the trading sessions that they are participating in along with the timeframe that they have chosen for trading. Those who hold their trades for a shorter duration will be spending more time analysing the market and carrying out the trading process because they will be entering and exiting more trades in a short period daily and this takes a lot of time. On the other hand, traders who analyse the market with longer timeframes can minimise the time required for monitoring the market as they enter a lesser number of trades and keep them running for an extended period.
Another thing to know about the daily trading schedule is that the trading day of a part-time trader will be a lot different from that of a professional trader. Some professional traders not only trade for themselves but also act as fund managers, trading on behalf of investors who sign up for a managed forex account like a MAM/PAMM account. Those who invest in such forex accounts get to earn the profits from trading without trading themselves. The profits/losses will be shared between the investors and the account manager based on fund allocation. We will go into the details of this in the next section. This is perfect for someone who is unable to trade themselves due to a lack of knowledge or limitations of time.
However, many traders prefer to trade themselves even if they don’t have any prior experience and in this case, there is a steep learning curve. The learning process is not just about studying the trading concepts in dairy but also about practical learning through demo trading. It will take some time to get into the shoes of a regular trader once you start live trading with actual funds and you need to follow a cautious approach in the initial phase. Each day is going to be different from the previous day and you should be prepared to deal with the challenges.
Types of Traders in the Forex Market
● Researcher of Currencies
These people actually work for forex brokerages as they have a lot of experience and expertise in forex trading. They may also work for financial institutions and their job is to conduct in-depth analysis and research on currency price movements and the factors that impact the price fluctuations in the forex market. They will be performing both fundamental analysis and technical analysis for publishing research reports about various currency pairs. Fundamental analysis focuses on macroeconomic and political factors that influence the exchange rates while technical analysis is done by interpreting the price patterns formed on a chart.
The research reports produced by currency researchers are very helpful for assessing the risk and it also allows traders to develop sound strategies for making profits in the volatile market. They may also work with traders and account managers by assisting them in devising better strategies. Some researchers also engage in educational activities like webinars, and seminars and write informative articles about various topics that are relevant for traders.
● Professional Traders Working as Account Managers
Now, these types of traders have chosen forex trading as their full-time career and primary source of income. They will be earning more by working as account managers for investors. They have a profitable trading system and years of experience in professional forex trading. Hence, investors decide to allocate their funds to these traders for initiating and executing trades on their behalf. I already talked about managed account services like MAM/PAMM accounts. But they may also be providing services like copy trading where they just let the investors copy their trades.
In the case of managed accounts, they will be trading with pooled funds in their master account and investors can see the results on their account. In copy trading, the professional trader simply trades with their own funds and the positions are automatically copied to the copiers’ account. Both managed accounts and copy trading is good for those who lack the time or skills to make profits through self-trading. Professional traders are compensated for their services either with a commission or a share in profits. This depends on the policy of brokers.
To become a professional trader, you will have to build a consistently profitable strategy along with a solid risk management system for keeping the account drawdown within limits. You should also join a brokerage platform that provides such opportunities to professional traders. But in order to gain followers or investors, you will have to become a top-performing trader with a good track record on the chosen platform. Because investors will always prefer to allocate their money to a stable and successful trader with some experience.
If you are a beginner, you can consider copy trading or MAM/PAMM account investing as a starting point for your trading journey. Your risk will be minimised with such trading solutions as the trading activities will be managed by a skilled professional and you have a chance to make profits even without much knowledge. You just need some basic knowledge to find a reliable broker and platform. You should be selecting a number of traders for investing as it helps to diversify your portfolio and manage the risk.
You won’t get any direct control over the trading process but you can choose traders who have the same level of risk tolerance as you. In the case of MAM account investment, you can also set some criteria for the usage of funds for trading and that way you get to decide the amount of risk that the professional trader can take while trading with your funds. Whether you are trading yourself or simply relying on a professional, the profitability can vary and you need to pay attention to risk management for securing your capital.
Besides these traders, you will also see a lot of ordinary retail traders who are just trading on their own using manual or automated strategies. Regardless of the type of trader you choose to become, Anyone who is disciplined and consistent with his/her efforts gets a fair chance to succeed in the forex market.
The Relevance of Regulations in Forex Trading
The first step that you need to take to enter the forex market is finding a trusted broker and platform for trading. There are many things to consider while choosing a broker for live trading and one of them is regulations. Regulations act like a safety net for a trader as a reputed authority is in charge of monitoring the brokerage and thus the broker will be doing their best to meet the standards that are set by the regulator that they are registered with.
Hence, you must look for brokers and trading platforms that are regulated by top-tier authorities based on the region in which they operate.
Bottom Line
To summarise, becoming a successful trader in the forex market is very much possible if you take the time to learn, prepare and patiently work towards your trading goals. Having emotional control and discipline is just as important as having knowledge and trading skills. The currency market is easy to access and there are many trading solutions to make the trading process easier. But getting desired trading results is not that easy and you need to take calculated risks.
