A foreign exchange trader is a highly specialised individual who buys and sells different currencies based on the dynamics of global financial markets. Financial exchange is traded globally for 24 hours from Monday to Friday in the world’s largest, most liquid market known as the foreign exchange market. While the appeal of high leveraged earnings often attracts many applicants, successful foreign exchange trading requires skills, expertise, and a high tolerance for risk.

The work of a foreign exchange trader revolves around currency conversion, involving the simultaneous buying of one currency, while selling another. Traders predict whether the value of a currency will rise or fall against another currency, thus, making their profits from forecast accuracies. For instance, a foreign exchange trader might buy Euros against US dollars, predicting that the Euro’s value will increase.

Foreign exchange trading is often compared to ‘shares trading‘. As with trading shares, where you buy and sell parts of a company, a forex trader trades currencies, purchasing a specific amount of one currency using another.

It’s important to note, however, that there are key differences between forex trading and shares trading. Foreign exchange markets operate continuously, 24 hours a day, five days a week, enabling trading during any global trading sessions. In sharp contrast, shares generally trade only during specific hours.

With daily trading volume exceeding $6.6 trillion, the foreign exchange market dwarfs the combined operations of all the world’s stock markets. Essentially, due to this global reach of trade operations, constant fluctuations in supply and demand, and the sheer size of the forex market, it is the most volatile and unpredictable.

The success of a forex trader depends on their strategy, knowledge, and understanding of market signals and fluctuations. Unlike shares trading where emphasis can be placed on knowing the company’s management, financials, and performance, forex trading places more emphasis on macroeconomic indicators; these include central bank policies, economic growth rates, inflation, and political risks. Traders must possess a profound understanding of these factors to forecast how exchange rates will change.

Forex traders also need to have a broad understanding of technical analyses. These involve reading and interpreting charts and graphs to predict future market movements. Employing risk management strategies is also essential, with many traders using options and futures to mitigate risks. Much as with shares trading, a disciplined approach to trading is essential for a competent forex trader.

As a career, being a foreign exchange trader is both exciting and challenging. It requires high attention to detail, the ability to work under pressure, and a positive attitude towards managing financial risks. With the right skills, knowledge, and dedication, Forex trading can be a profitable and rewarding profession.