expand/collapse risk warning

Trading financial products on margin carries a high risk and is not suitable for all investors. Ensure you fully understand the risks and take appropriate care to manage your risk.

Trading financial products on margin carries a high degree of risk and is not suitable for all investors. Please ensure you fully understand the risks and take appropriate care to manage your risk.

Your capital is at risk.

Forex Trading

Forex traders: who are they? | Skilling.com

Pattern trading: The best forex trading platforms showcasing pattern trading.

When you hear about ‘Forex traders’, you might imagine people in suits running around a stock exchange or glued to their computer screens, watching stock prices go up and down at a dizzying pace. 

But Forex traders aren't this elusive group of people out of reach; they are actually individuals who trade foreign currency with the aim of making a profit. 

So is Forex trading worth it? What are the risks? And how do you become one?

Forex trader: definition

Forex trading is the act of buying and selling currencies. A forex trader is a person who buys and sells currencies for profit. These transactions are done through a forex broker using a forex trading platform. The forex market is the largest financial market in the world, with a daily trading volume of over $6.6 trillion. 

Don’t trade without knowing your trading style

Do you know which type of a trader you are? Are you a day trader? scalp trader? position trader? or swing trader?

Regardless of which market you choose, whether it's forex, cryptocurrencies, stocks or commodities, this free trading style quiz will help you identify where you belong in minutes. 

Find out your trading style for free

How to become a forex trader

To become a forex trader, follow these steps:

  1. Open an account: Start by opening a real account or practising with a free demo account to familiarise yourself with the trading platform and strategies.
  2. Choose your currency pairs: Select the currency pairs you want to trade with. Beginners usually opt for major pairs such as EUR/USD, USD/JPY, GBP/USD, and USD/CHF due to their high trading volume, liquidity, lower volatility, and tight spreads.
  3. Understand Forex trading using CFDs: When you trade forex using Contract for Difference (CFDs), you're agreeing to exchange the difference in the price of a currency pair from when you open a position until you close it. Opening a position requires a margin deposit, which allows for higher profits and losses relative to the deposit amount.
  4. Determine the size of your operation and manage risk: Decide on the size of your operation based on your risk tolerance. Keep in mind that trading involves substantial risk and could result in significant financial loss if not managed properly.
  5. Execute your trade: Once you've set up everything, execute your trade. Monitor market movements and adjust your strategies as necessary.
  6. Explore minor and exotic pairs: These can be popular among those interested in emerging markets. While these markets may be less liquid, they can still be very volatile, offering potential opportunities for profitable trades.
  7. Choose trading time: The best time to trade forex is usually when the London Stock Exchange (LSE) and New York Stock Exchange (NYSE) sessions overlap (between 09:00 and 13:00 CET). This period sees the highest liquidity in the forex market, and increased volatility provides more opportunities to take positions.

Curious about Forex trading? Time to take action!

Use our free demo account to practise trading 70+ different Forex pairs without risking real cash

Sign up

Names of famous forex traders 

There are many successful forex traders who have made a significant impact on the trading industry in the past years. Here are some of the most famous ones:

  1. George Soros: Known as "the man who broke the Bank of England," Soros is famous for his short sale of US$10 billion worth of pounds, yielding him a profit of $1 billion during the 1992 Black Wednesday UK currency crisis.
  2. Stanley Druckenmiller: Druckenmiller successfully managed George Soros's money as his head trader for several years. He also made lucrative forex trades, notably betting against the British pound in 1992.
  3. Bill Lipschutz: Known as the "Sultan of Currencies," Lipschutz is considered one of the best forex traders. He started trading while at Cornell University and turned a $12,000 investment into $250,000.
  4. Andy Krieger: Krieger is known for his "big bet" on New Zealand's currency, where he almost broke the kiwi. He was working for Bankers Trust in 1987 when he bought Kiwi dollar shorts worth more than the total money supply of New Zealand.
  5. Paul Tudor Jones: Jones has consistently made money in some of the most tumultuous periods in stock market history. He is known for his macro trades, particularly betting against stock market crashes.
  6. Michael Marcus: Marcus is one of the best professional forex traders in the world. He turned an initial loan of $30,000 into $80 million. His first big success came when he purchased German marks for pennies during its collapse following the Second World War.
  7. Joe Lewis: Lewis is a British businessman and investor who currently lives in the Bahamas. He earned billions of dollars in forex trading.
  8. Ray Dalio: Founder of the investment firm Bridgewater Associates, one of the world's largest hedge funds, Dalio's net worth is $15.4 billion.
  9. James Simmons: A mathematician and quantitative investor, Simmons founded Renaissance Technologies, a private hedge fund firm based in New York.

Conclusion

Forex trading could be a profitable way to earn extra cash if done carefully and strategically. Anybody with a little bit of knowledge and dedication could become a forex trader. Remember to always do your research, manage your risks and stick to your trading plan. 

FAQs

Who is a Forex Trader?

A forex trader is an individual who trades foreign currencies on the forex market with the aim of making a profit. This can be done on behalf of a financial institution, such as a bank or hedge fund, or it can be done independently as a retail trader using their own money.

How do I become a Forex trader as a beginner?

To become a forex trader as a beginner, you should start by learning the basics of forex trading - understanding currency pairs, market volatility, and the factors that influence exchange rates. Next, open a demo account with a reputable forex broker to practise trading without risking real money. Then, develop a trading strategy based on technical analysis and fundamental analysis. Once you feel confident, you can open a real trading account, start small, manage your risk, and continuously analyse and learn from your trades.

How do Forex traders work?

Forex traders work by predicting whether the value of one currency will rise or fall against another currency. They buy (or 'go long' on) a currency pair if they believe the base currency will rise against the quote currency, or they sell (or 'go short' on) a currency pair if they believe the base currency will fall against the quote currency. Traders make a profit or loss based on the accuracy of their predictions and the size of their position. They use various tools and strategies to analyse the market and make these predictions, including technical analysis (studying price charts and patterns) and fundamental analysis (considering economic news and data).

This article is offered for general information and does not constitute investment advice. Please be informed that currently, Skilling is only offering CFDs.

Curious about Forex trading? Time to take action!

Use our free demo account to practise trading 70+ different Forex pairs without risking real cash

Sign up