Professional Forex Trader
Professional forex traders generate income from the currency markets. Separating them from retail beginners is access to greater leveraged capital, sophisticated trading strategies, and a resilient mindset. Here we look at how to become a professional forex trader, sharing tips, secrets and trading advice.
Top Forex Brokers
What Is A Professional Forex Trader?
A professional forex trader is an investor that generates a salary from the currency markets. Forex trading is typically their primary source of income and they employ multiple tools to generate profits, from advanced technical indicators to trading mentors.
Beginners Vs Professional Forex Traders
Everyone has to start somewhere. But a number of characteristics separate the beginner from the professional forex trader.
Professional retail traders benefit from access to higher leverage rates. Whilst the FCA limits leverage to 1:30 for retail traders in the UK, professionals get leverage up to 1:500. So where a beginner can trade with £300 if they put down £10, a professional forex trader can invest £5,000 in return for a £10 capital outlay.
Professionals draw upon years of experience to inform investment decisions. It’s not that there is some holy grail of information that they have access to. Simply, they’ve spent considerable time analysing trends and taking calculated decisions that often give them a clearer understanding of the market.
With a deeper understanding of the forex market, professionals are able to deploy more sophisticated strategies to generate earnings. Whilst a beginner may trade based purely on fundamental news events, a professional could be acting upon detailed technical analysis using a range of indicators to identify precisely when to enter and exit the market.
Also, retail forex beginners often place smaller trades throughout the day, whereas professional forex traders may concentrate efforts on key trading times. For example, they may focus on the opening and closing minutes after non-farm payroll announcements.
Beginners tend to stick to major currency pairs, such as EUR/USD or GBP/USD. This is due to lower liquidity risk. However, a professional forex trader may realise the potential of minor and emerging pairs such as the AUD/JPY, profiting from interest rate differentials.
While beginners may feel out of their depth when the market moves against them, professionals have been down this road before. After many years of trial and error and testing out various strategies, they can often control their emotions in a way that a beginner can’t, resisting the urge to make rash decisions.
Ultimately, a professional forex trader aims to accumulate earnings from the currency markets much like a beginner. The difference is the resources and tools they use to do so.
How To Become A Professional Forex Trader
While there is no set formula, there are steps beginners can take to become a professional forex trader:
- Objectives – Have a realistic plan. For example, do you want to generate a 10% return across the year? Make sure your target is achievable and don’t forget that income will vary each month. Instead, focus on average returns over a longer period.
- Develop strategies – Professionals are willing to try new things. Test forex trading on news events, develop technical analysis techniques and utilise the tools at your disposal. Automated trading algorithms, for example, can help boost returns if you have an established and effective strategy. Demo accounts are also an excellent way to test new strategies in a risk-free environment before putting real capital on the line.
- Risk management – Take a disciplined approach to risk. Many professionals won’t risk more than 1% of their total capital on a single trade. This helps protect their portfolio and ensure a few bad trades won’t wipe them out.
- Education – Take advantage of the multiple free and paid resources available online. There are a host of professional stock and forex trader courses available today. A trading academy can help coach you through the basics of being a professional forex trader and walk you through a library of advanced strategies. Look for training courses with good reviews, interactive content and established mentors. You should also be able to interview coaches to get their tips and advice. Some courses today even offer professional forex trader certifications. There are also a number of popular forex trading books that can help boost your knowledge.
Professional Forex Trader Psychology
Typically, new traders are keen to chase trends and beat the market to win big. This can result in over-trading and large losses. Professional forex traders, on the other hand, keep a firm grip on their emotions and stick to their strategy.
A professional forex trader’s psychology will be predicated on patience, discipline and taking adequate risk management measures. They might test out new strategies but this will be through demo accounts before they risk real capital. They’re less worried about missing trading opportunities and more focussed on taking the time to make the right investment decision.
Best Platforms For Professional Forex Traders
There are a number of leading platforms and software options available to professional forex traders:
- MetaTrader 5 – MT5 is an advanced platform that followed the industry popular MT4 terminal. The MT5 solution offers 21 timeframes, along with 80 analytical objects and indicators, plus automated trading. The highly customisable platform is a great option for experienced professionals seeking powerful trading tools.
- NinjaTrader – With dozens of technical indicators and thousands of software add ons, NinjaTrader is popular among professional forex traders. You can also backtest swing trading strategies and develop your own algorithmic investing programs.
- Trading Station – FXCM’s proprietary web solution offers integrated news and economic calendars, cloud storage for indicator settings, customised trading analytics and advanced charting. It’s an excellent all-in-one solution for professional forex traders.
If you’re wondering what brokers do professional forex traders use, check out our list of leading providers.
How Much Does A Professional Forex Trader Make?
The average salary of a professional forex trader depends on their experience, ability and trading capital. Professional forex traders may aim to make a 20% profit over the year, so if they invest £200,000, they’d look to make £40,000 in profit. With that said, each trader has their own objectives and some professionals will lose money. It’s important to be under no illusion – the life of a professional forex trader has troughs as well as peaks.
Becoming A Professional Forex Trader
Becoming a professional forex trader takes time, patience and commitment. It isn’t something that will happen overnight but through extensive practice. It can be achieved through using demo accounts, learning your craft – as with any other skill – and keeping your cool to ensure you’re working with your head and not your emotions.
What Is A Professional Forex Trader?
A professional forex retail trader is an investor that generates income from the currency markets. Trading on the FX market will typically be their primary source of income and they’ll commit a substantial amount of time to analysing and trading the markets. The key differences between beginners and professionals are the capital and leverage accessible, the complexity of strategies used, and the emotional discipline employed.
What Steps Should I Take To Become A Professional Forex Trader?
To become a professional forex trader, you need to test and refine strategies while developing a robust mindset. You also need to utilise the wealth of educational resources available and trade with good forex brokers that can meet your needs. Utilising careful risk management techniques will also protect losses.
How Much Do Professional Forex Traders Make?
The average salary of a professional forex trader depends on their experience, skill and investing capital. Some professionals may aim to make a 5% profit over a year while others aim for a 20% or more return. Of course, being a professional forex trader doesn’t mean consistent profits, many investors will see months where they lose money.
What Platforms Do Professional Forex Traders Use?
The platforms and tools used by professional forex traders varies depending on personal preference. With that said, popular software includes MetaTrader 5, NinjaTrader and Trading Station. These platforms offer advanced charting, powerful add-ons and a host of automated and copy trading features.
Do Professional Forex Traders Use Indicators?
Many professional forex traders use technical analysis and a suite of indicators. Popular systems like MT5 offer dozens of built-in indicators along with a long list of additional custom indicators. Technical indicators are a popular way to analyse market sentiment among professional forex traders.