The profession of a foreign exchange trader is inextricably linked with the international foreign exchange market FOREX. Any person can become a trader; this does not require any specialized education. Nevertheless, to work profitably in the foreign exchange market, you need to know a lot and be able to.
As you might guess, a currency trader is engaged in currency trading. In Forex, several trillion dollars worth of exchange transactions are performed every day. Think about this figure - it's huge. Most of the transactions take place between banks of different countries - both state and commercial. Banks buy and sell a variety of currencies, all this affects exchange rates - they either rise or fall, these fluctuations can be very significant.
A trader makes money precisely on fluctuations in the value of currencies. The specificity of Forex is that trades can be opened both for buying and selling. This means that a trader can equally successfully earn both on the growth of the rate of a particular currency, and on its fall.
How currency is traded
All transactions are made from a computer through a special trading terminal - for example, Meta Trader 4. A trader works through a brokerage company of his choice, for each transaction he pays a small commission to the broker. The opening and closing of trades is almost instantaneous.
The trader's task is to guess in which direction the course will go and open the corresponding buy or sell deal. The most popular currency pair, which accounts for more than 70% of all transactions, is EUR / USD - the euro to the US dollar. For example, the exchange rate of a pair is 1, 3382 - this means that for 1 euro they give 1, 3382 US dollars. There are other currency pairs, and precious metals trading is also possible.
The exchange rate of currency pairs is constantly changing. The average daily movement of the EUR / USD pair, or Eurodollar, is approximately 50-100 pips. For example, 100 points of growth from the price of 1, 3382 will give a rate of 1, 3482, and 100 points of decline will set a new price of 1, 3282. It is on these fluctuations that the trader earns.
How much can you earn in Forex?
Trading is carried out in lots - this means that a trader can open a deal for a certain volume in lots. 1 lot = $ 100,000. But to open a deal for 1 lot, a trader does not need to have $ 100,000, since the principle of margin trading operates in Forex. We can say that the broker credits the trader, allowing him to work with large amounts. At the same time, the trader will never be in debt to the broker, since the possible loss is limited by the amount available to the trader.
In practice, to open a deal for 1 lot on the EUR / USD pair and a leverage of 1: 100 (for 1 dollar of a trader, the broker adds 99 of his own), you need to have about 2000 $ on the account. It is also possible to work with smaller lots - for example, 0, 1 or 0, 01. Accordingly, the amount is reduced and the required amount.
Suppose that a trader opened a deal in Eurodollar with a volume of 1 lot and was able to take 50 points - the price rose from 1.3382 to 1.3432. The cost of 1 point in this case is $ 10. This means that 50 points will give the trader a profit of $ 500. Lot 0, 1 will give a profit of $ 50, 0, 01 - $ 5. With the funds available, a trader can open deals with a volume of tens of lots.
Benefits of being a trader
If a trader works for himself, then the main advantage is his complete independence from anyone, including financial. As long as the foreign exchange market exists, he will be able to make money on it - of course, if he has the necessary experience. In practice, it takes several years of hard work to gain experience. Newbies, as a rule, lose their money because they do not have the necessary level of understanding of the market.
