Beginners are usually advised to try part-time trading first before taking up forex trading as their career for a living. You need to spend some time learning to use various available trading platforms so that you can trade with ease. This can be the traditional MT4 platform with basic tools or the sophisticated and modern platform like MT5, which consists of advanced features and additional tools. Novice traders who are passionate about currency trading and have enough funds and resources to support themselves during the learning process can surely think about becoming full-time forex traders after some preparation.
If you are also contemplating this idea or want to pursue forex trading as your profession in the future, this beginner’s guide is a must-read for you to know everything about attaining success as an independent trader.
- Should you become a Professional trader or an Independent Trader?
Many of us think that a professional trader and independent traders are very much the same who solely focus on forex trading as their career. However, a professional trader is different from an independent trader and you need to understand how they differ to decide the most suitable option for yourself. A professional trader is someone with extensive knowledge and years of experience in trading and they will be executing trades for a financial institution for a bunch of investors depending on them for account management services like MAM/PAMM accounts.
You cannot get this type of job without a successful track record with your past trades and an already profitable strategy or trading system generating sufficient profits. Professional traders may also utilise their own funds for trading along with the funds of the firm, institution or individual investors they trade for. However, some professional traders will solely be providing trading services for others by making trading decisions and executing trades without risking their own funds.
When a professional trader risks their capital for trading, they will be rewarded on a profit-sharing basis and if they don’t use their funds, the compensation model will be different and will be decided by the institution based on their performance or volume of trades executed. On the other hand, as an independent trader, you will be trading for yourself and won’t be providing any services to others. You have to bring your trading capital and carry out the trading process on your own without being monitored or assessed by anyone.
When you are an ordinary retail trader, entering and exiting trade positions with your own money with the intention of making profits, you will be referred to as an independent trader. A professional trader will be initiating and managing trades for others and they will earn by providing trading services or sharing their strategy for the benefit of others. In any case, you need to use basic trading tools like Forex calculators for making quick and informed trading decisions and implementing your strategy with precision.
- Types of Professional Forex Traders
- Market Maker – A market maker is a professional trader working for a top-tier financial institution or bank. A market maker is in charge of contributing towards the liquidity by executing high-volume trades and offsetting the positions of retail traders by acting as a counterparty to these trades. They only scalp for earning from spreads as they decide the bid and ask prices as the market dealer without holding any long-term position.
- Strategic Trader- Strategic traders also work for a financial institution or fund management firm but will be entering trades for longer. They are good at in-depth market analysis combining both fundamental and technical aspects for executing trades with higher profit potential and are expected to perform well under pressure in corporate settings.
- Customer Dealer – Just as the name implies, these trading professionals are not primarily engaged in trading but they deal with the clients and guide them to carry out trades. They will perform market analysis and give trading advice to the clients so that they can navigate the market with the guidance of an expert. Customer dealers may not execute trades themselves or they may just enter smaller positions to assess the trade scenario and interact with the clients, assisting them in making informed trading sessions. They also work for a company that provides trading services and have to work under pressure.
- Which one will suit you?
If you are ready to take some risk as a professional trader, you can choose any of the first two options while the customer dealer position is more suitable for those who are risk-averse and want to work in people-oriented jobs by simply giving valuable advice and sharing their knowledge with others. The qualification for becoming a professional trader under a company is not very specific as different employers have different criteria for selection.
A college degree is not mandatory but having some knowledge in finance and economics will be a huge plus. But being experienced and skilled is most important to land on a professional trader job with high pay. I will suggest beginners start with demo trading first, as you have to develop your skills before upgrading to a professional level and the realistic yet risk-free trading environment you get on a demo account is apt for practical learning.
What Kind of Person wants to be an Independent Forex Trader?
Being an independent trader is an attractive career path for many who want to attain financial freedom with a flexible work schedule where they are not being supervised or controlled by a superior. You are not subject to any scrutiny or assessments and get to do things at your own pace. Your profits will remain yours and you are not answerable to anyone even when you encounter losses. Once you become profitable, you just need to remain consistent to make a living as an independent forex trader.
You get to work from the comfort of your home or even while travelling without any restrictions of time or location which makes it an ideal job for those who are free-spirited and prefer to go with the flow. However, you need to indulge in systematic learning and follow a disciplined approach towards trading. This is the key to success in the forex market.
Things to keep in mind before becoming an independent forex trader
- Quitting your current job is not recommended unless you are wealthy
I often see people who quit their 9 to 5 jobs with the ambition of generating income from forex trading alone. However, those who don’t have a good amount of savings should not go down this road as the risk will be higher. You can’t expect to become profitable from the first day itself and someone who is struggling to make ends meet with their monthly salary should never get into full-time trading in the first place. But if you come from a stable financial background with enough net worth to support yourself, you can venture into full-time trading after considering the risks and rewards.
- Always have a plan and a backup plan
When you decide to become a full-time independent trader, you will have to come up with a solid trading plan which describes the strategy you can follow to get the desired results. You need to gain knowledge about market fundamentals and master the art of technical analysis to implement your plan in the best possible manner. But you should also have a backup plan in case the first one doesn’t yield the expected results. You need to prepare for the best but also consider the worst-case scenario and prioritise risk management in every decision that you make as a trader.
- Choosing the right broker and taking time to trade on a demo account
Lastly, you need to choose the right broker and trading platform that complements your trading style and strategy with the most favourable trading conditions. There are many options to consider but you need to find the most suitable broker that meets your requirements and preferences in terms of type of account offered, trading cost and mode of execution. You should always utilise the demo account facility before risking real money. Demo account practice is essential for getting familiar with the tools and trading environment beforehand and when you get desired results with demo trading, you will feel more confident in the live markets.
Final Thoughts
Finally, starting off your trading journey as a full-time trader is not an easy thing to do. You must be willing to wait and overcome the challenges that you come across before becoming consistently profitable. You need to stay grounded and set realistic expectations about profit targets and account growth. Forex trading surely gives us a lot of opportunities but it should not be seen as a source for making easy money. Treat trading like a serious business and take only one step at a time as rushing the process will only result in costly and irreversible mistakes.
