Becoming a professional forex trader requires years of effort and is backed by well-defined strategies that show consistent profitability. But the reward is worth the considerable effort; professional forex traders can earn a high income and live a lifestyle that most people can only dream of. Opportunities abound for these regular players; they may choose to work in international banks, hedge funds, or simply put on their pajamas and work from the family home office.
Let's look at a typical day in the life of a professional forex trader who manages private accounts. These private accounts may include family funds or a share of other people's money. This is the goal of millions of home players who want to make a living trading currencies, but without the restrictions of a more traditional forex workspace such as an international office.
Key Findings
- Becoming a professional forex trader requires years of effort and is backed by well-defined strategies that show consistent profitability.
- A professional Forex trader is usually forced to specialize due to the enormous complexity of the foreign exchange market.
- Most US professionals start with EUR/USD and USD/JPY, adding other pairs as they fit into the time frame dictated by these popular instruments.
- Forex professionals have a deep interest in economic policy and the policies of central banks around the world, understanding how the Federal Reserve System (FOMC), European Central Bank (ECB), Bank of Japan (BOJ) and the People's Bank of China (PBOC) influence currencies.
Home forex traders can also use this guide to evaluate their current progress in creating their dream job within the global forex trading stream. Of particular interest, this article will look at workflows that traders can use for morning preparation and end-of-day check-ins, attitudes and strategies during the trading day that can impact performance, and lifestyle choices that either contribute to , or undermines profitability.
Determining market opening hours
A professional Forex trader is usually forced to specialize due to the enormous complexity of the foreign exchange market. Moreover, it is a biological as well as a logistical imperative. Forex trading takes place 24 hours a day, from Sunday evening to Friday noon in US time zones. This 24/7 action makes continuous real-time monitoring impossible, forcing a razor-sharp focus on specific time frames and currency pairs.
Most US professionals start with EUR/USD and USD/JPY, adding other pairs as they fit into the time frame dictated by these popular instruments. This often includes other Euro and Yen crosses, as well as Australian and Canadian dollar crosses. They make wise choices, often changing the pairs they watch closely over time because they understand that tracking too many markets will reduce the reliability of their strategies.
Euro price action begins between 1:00 and 3:00 am EST. As a result, local professionals may be up earlier than stock or futures traders. This timing takes many of these people out of the game after the New York lunch break, causing a noticeable drop in volume and volatility in the US afternoon Forex market. This pattern fits nicely with the timing of key economic reports in Europe and the US, but it fails to reflect events in Asia that could move global currency markets for months.
In general, this leaves two other options for specialization. Traders can compare market hours with other US traders by aligning their activities with the New York stock markets and Chicago futures exchanges.
Alternatively, they may decide to further alter their sleep cycles by waking up for the Asian session and ending market days earlier after US sunrise. Professionals of all specialties focus their efforts on the currency pairs that provide the greatest profit potential for their strategies. This inevitably changes over time, forcing them to adjust market hours and sleep hours to manage profitability.
Trading day
Trading screens turn on shortly after waking up as currency markets are open and prices rise or fall during sleep hours. However, stress levels are low as highly trusted brokers hold onto their capital while carefully placed stops protect against abrupt changes such as the August 2015 devaluation of the Yuan in China.
Additionally, they always review risks at the end of the market day to ensure that losses incurred during the sleep cycle are within their risk tolerance.
Research
Forex professionals have a deep interest in economic policy and the policies of central banks around the world, understanding how the Federal Reserve System (FOMC), European Central Bank (ECB), Bank of Japan (BOJ) and the People's Bank of China (PBOC) influence currencies. They keep a detailed calendar of economic news and central bank meetings that will influence their strategies, often forgoing sleep when a key meeting is scheduled outside of their normal market-watching hours.
Professional forex traders constantly study global economic policies and central bank policies, understanding that currency trends can change dramatically when central banks change direction, as has happened many times since the 2008 economic crash.
They study the latest economic news over their first cup of coffee, adjust stops and close positions if necessary. Time frames now come into play as many professionals hold large portions of smaller positions for longer periods of time. This allows them to keep stops free and away from the predatory algorithms that dominate today's markets.
These efficient robot traders predict price zones where retail stops are clustered and reach those levels during less active trading hours or in response to economic news.
Market day
The activity of the market day depends on the current strategies. Professionals who manage the bulk of long-term positions can be surprisingly inactive during a typical session, waiting for key price zones to come into play.
It's a different story with day trading strategies, which require action fast and furious. Despite this, these positions are clustered around major economic and central bank report hours, with the remainder of the session set to watch rather than action mode.
Professionals choose a specific time to end their market days rather than letting circumstances and price action determine it. The 24/7 environment is constantly changing and there is no time to escape, but people need other activities to maintain balance. Lunch hour in New York is the most popular choice for local professionals as it also marks the close of trading on European stock exchanges.
The trading day ends with a performance and session review, highlighting characteristics that may impact future strategies and results. Professionals also take note of economic news scheduled for their off-hours, adjusting stops to account for greater risk. Finally, they take one last look at currency pairs they weren't watching closely that day, checking for trading opportunities they may have missed.
Lifestyle choices
Trading the Forex market 24 hours a day can be exhausting. Therefore, making the right lifestyle choices is essential to building discipline and focus because that is what ultimately affects the end result. A forex professional spends as much time on relaxation and personal health issues as he does on monitoring global markets. These people also know how to have fun, regularly taking time to step away from their trading screens and relax with friends and family.
Many traders go even further on a physical and mental level by quitting smoking, limiting alcohol consumption and eating a healthy diet that keeps their weight under control and their minds alert. They also understand that problems in interpersonal relationships can immediately lead to decreased productivity, so they take ample time to communicate with spouses, parents and children.
Bottom line
Professional forex traders live a wealthy lifestyle, but they pay for it with many hours of research and market observation. Sleep deprivation is common for these people until they develop the trust necessary to make their trading strategies and risk management work without constant supervision.
