A Day in the Life of a Forex Trader
George Polizogopoulos
Any professional forex trader has the potential to make massive returns from their initial investment or on the nastier side any trader can make massive losses. It is not a game of chance, trading is a skill of emotional control and sound decision making. Traders have an understanding of market mechanics and their behaviour as a response of economic trends.
Traders makes their living from taking advantage of price differences between the buy and sell price of currency pairs and more importantly they make their money by following the market trend. If you yourself have studies forex charts you may notice how the price fluctuates - there are only three directions the price can do: rise, fall or stay the same. Currency prices only stay the same if the currency value is not floated and fixed to a certain value. Traders make their money on the difference on price so the trader can either buy long and hope the currency rises or sell short as the currency drops in price and still makes a profit.
The advanced forex trader waits for a new trade or rather waits for the right time to open a new trade by looking for the right indicators and signs to signal an entry into the foreign exchange market. There are two things that the forex trader can do at home to watch out for an entry signal: look at charts or wait for news. Traders watch for the right trending signals to enter a trade. And the primary rule for the trader is that 'the trend is your friend.' Stick to the trend and you won't get hurt. Secondly, traders also watch the news. They must know what economic data is coming out on which days and what that data means to the future of the economy of the respective countries. If they don't keep track of these facts and economic data and indicators they may find that some currencies are especially volatile during these news announcement events and see the market jump. The forex trader must be ready for these economic announcements to ensure they can anticipate the increased market activity.
Once the forex trader has successfully entered into a trade, a trade that is going well the trader then simply rides the trend to completion, implementing a trailing stop to lock in profits as the price trends the way the trader wanted the trend to go. But if the trade goes sour, the forex traders needs to exit the trade with grace. The trader must cut their losses to succeed in the business of foreign exchange trading.
Hopefully this has given you an overview of what a professional forex trader does to make a living from simply taking advantage over the price difference. The technique is to enter a trade correctly using trend analysis or a news announcement and then follow the rules of "riding the trend" or the "trend is your friend" with "cutting your losses quickly."
This article "A Day in the Life of a Forex Trader" can be found in our Foreign Exchange (FX) Markets category.
About the author:
George Polizogopoulos is a staff writer for MyShareTrading.com a>, an information hub for traders: forex, shares, derivatives, CFD's. MyShareTrading.com also provides free blogs for traders who wish to share their market experiences.
You may republish this article on the condition that it is not edited and all html links to our website is kept intact. MyShareTrading.com © 2006
The latest information and news on Forex:
FOREX-Yen slips on BOJ story, sterling stays heavy - Reuters
Reuters
FOREX-Yen slips on BOJ story, sterling stays heavy
Reuters
said FOREX.com analysts in a note. The pound, already under pressure, dipped after an unexpected drop in UK industrial production data for January. ...
WORLD FOREX: Euro Ticks Up Vs Yen On Japan Importer BuyingMarketWatch
WORLD FOREX: Dol...
Forex: GBP/JPY falls and trades at 134.67 - NASDAQ
FXstreet.com The Forex Market
Forex: GBP/JPY falls and trades at 134.67
NASDAQ
FXstreet.com (Sydney) - The GBP has lost ground against the yen and is trading at 134.67. Earlier, the pair had opened at 134.89 and set an intraday high of ...
Forex - Dollar up vs. most rivals on poor German, UK dataForex P...
WORLD FOREX: Euro Down Before US-Greece Meeting; Sterling Falls - MarketWatch
Times Online
WORLD FOREX: Euro Down Before US-Greece Meeting; Sterling Falls
MarketWatch
TOKYO (MarketWatch) -- The euro fell against the dollar and the yen in Asia Tuesday as speculators took profits before a key US-Greece ...
FOREX-Euro up vs dlr, but gains capped by Greek PM commentsReuters
Forex - Eu...
SAFE says China's forex holdings are normal - China Economic Review
Boston Globe
SAFE says China's forex holdings are normal
China Economic Review
China's reluctance to disclose the make-up of its forex reserves has in the past worried investors, who fear that with the sheer size of the country's ...
China's forex reserves weather crisisCCTV
China's f...
Forex - Euro rises vs. dollar, hitting daily high at 1.3625 - Forex Pros
Forex District
Forex - Euro rises vs. dollar, hitting daily high at 1.3625
Forex Pros
Forex Pros ? The euro rose against the US dollar during European midday trade on Wednesday, hitting a daily high at 1.3625 in the wake of mixed economic ...
Forex-Metal , Forex-MetalForex Hound
Forex - Euro slips vs. do...
foreign exchange - Google News
Regulator also urges Chinese purchase of Treasurys not be politicized - Marke...
Boston Globe
Regulator also urges Chinese purchase of Treasurys not be politicized
MarketWatch
Yi Gang, director of China's State Administration of Foreign Exchange, said China's gold reserves, at 1054 metric tons, were the fifth-largest in the world, ...
China Standing Firm on Currency Policy D...
RPT-Q+A-What foreign exchange reforms are brewing in Brazil? - Reuters
RPT-Q+A-What foreign exchange reforms are brewing in Brazil?
Reuters
Brazil's foreign exchange legislation includes law 4595, which creates the central bank and gives the national monetary council the authority to formulate ...
and more »
Race to the bottom with G4 currency rhetoric - Reuters
Reuters
Race to the bottom with G4 currency rhetoric
Reuters
A customer is served at a counter inside a foreign exchange store displaying a poster of various banknotes including the Chinese yuan or renminbi (RMB) in ...
FX Foreign ExchangeInside Futures
Foreign Exchange Insight - The Pound declines again...
Lone Star to resume $3.9 billion KEB stake sale: KEB - Reuters
Lone Star to resume $3.9 billion KEB stake sale: KEB
Reuters
KEB has strength in foreign exchange trading and trade financing, and employs 7500 staff. A buyer would be able to leverage KEB's foreign networks to head ...
and more »
Gold Doesn't Shine For China - Wall Street Journal (blog)
Reuters
Gold Doesn't Shine For China
Wall Street Journal (blog)
Now China's chief foreign-exchange regulator Yi Gang said Tuesday at a news conference during the National People's Congress that ?currently a few factors ...
Gold futures extend losses as dollar gainsMarketWatch
China Cannot Aff...


