Foreign exchange (forex) trading is one of the most popular forms of trading across the globe. Every day, millions of traders worldwide are constantly executing trades, which by the end of a single day, can amount to the trillions worth of dollars.
The forex market is one of the most highly lucrative and liquid markets in the financial industry, which naturally entices a vast number of forex traders. Currency values are ever-changing, and this means there’s always a potential opportunity to profit from price movements if your strategies are formed correctly.
If you, like so many others, are interested in becoming a forex trader, you may feel as though you would benefit from an insight into what this role might entail.
If so, then read on, to find out what a day in the life of a forex trader might look like.
Table of Contents
Working hours
The first thing to establish as a professional forex trader, is your working hours, as this will determine how your day starts. If you’re part of an organisation or trading firm, then your hours will likely already be set. However, if you’re an independent investor or work from home, then you’ll have the flexibility of setting your own hours.
The forex market is open 24 hours a day, five days a week, from Sunday 5:00pm EST to Friday 4:00pm EST. Since the market is ongoing throughout the day and night, your hours come down to preference. However, you can expect the average trader to be up and ready for the day from 6:00-7:00am.
This gives you sufficient time to gather your plan for the day, and be ready for any significant movements that might occur early in the day – for instance, the London Stock Exchange (LSE) opens at 8:00am, and movements here can heavily influence forex.
The trading platform
Once ready to start working, a forex trader will then need to access their forex trading platform.
This will be the software through which their entire trading journey will take place. Trading platforms are essentially the heart and soul of your trading experience, where you can analyse the market, execute and manage trades, and take advantage of a range of different trading tools and features.
There are many different trading platforms to choose from, but as they play a significant role in the success of your trading experience, a professional forex trader will put great consideration into which platform they trade on.
The first thing to do on this platform is assessed how your trades, and the market as a whole, performed overnight, as well as devise a strategy for what trades you will execute today. A smart trader will also check their trading calendar for any external events set to occur in the day, which might have an impact on the market.
Opening positions and using leverage
Now is where the most crucial element of a trader’s day takes place – the trading. There are various methods one might use when trading on forex, but for simplicity, we’ll discuss the use of contracts for difference (CFDs).
Trading forex CFDs, as opposed to the traditional method of buying and owning an asset, involves the purchasing of contracts (units) on a currency pair. This is essentially speculation of how you expect the currency pairs’ value to move, and your return (or loss) will depend on how accurate you are.
For instance, the average trader might consider opening up a long (buy) position on the Euro (EUR)/US Dollar (USD). Should the price rise throughout the day, the trader will make a profit, and should it fall, incur a loss. A short (sell) position works the same way, except it predicts the price falling, so the profits and losses are reversed.
Most traders, on the right platforms, will also have the use of leveraged exposure. This means that you can gain significant exposure on trade, but by putting down a lesser deposit. For a leverage ratio of 1:10, for example, you can trade a currency pair with a position up to £10,000, for only a £1,000 deposit. Be warned, however, that the exposure will mean your losses are also based on the full amount.
With expert guidance and strategic planning, an average trader’s day should hopefully yield some successful trading profits, and some mitigated losses.
Clocking out
The time a forex trader might finish is, again, up to the individual. With the majority of markets closing at 4:00 pm, this might be a good time to call it a day. Whilst forex markets remain open for 24 hours, you naturally can’t be present for that entire period.
Forex trading can be an exhausting role, with all the focus and attention it requires. Most traders will spend the rest of their day winding down, whether spending time with family, a good book, or even exercising.
For optimal awareness of your trades, and the market’s performance, the majority of traders will take one last look at the market in the evening, to see if any adjustments need to be made, or any trades can be placed overnight.
This concludes a day in the life of a forex trader.
If this role appeals to you, and you feel you would benefit from pursuing your own forex trading journey, then be sure to apply what you’ve learned into creating your own unique forex trading experience.