TUTORIAL: Forex Trading Rules
Forex markets are open 24 hours a day, five total days a week, which means jobs are fast-paced, involve long days and strange work hours. They require knowledge of and compliance with laws and regulations governing financial accounts and transactions. Some jobs require candidates to have passed one or more exams, such as the Series 3, Series7, Series 34 or Series 63 exams.
If you are eligible to work in a foreign country, a career in forex can bring the added excitement of living abroad. No matter where you work, knowing a foreign language, particularly German, French, Arabic, Russian, Spanish, Korean, Mandarin, Cantonese, Portuguese or Japanese, is helpful and might be required for some positions. (To learn more about the unique attributes that may come as a surprise for new forex traders, see "The Forex Market: Who Trades Currency and Why.")
This article will provide an overview of five major career areas in forex, but please keep in mind that specific positions tend to have different names at different companies.
1. Forex Market Analyst/Currency Researcher/Currency Strategist
A forex market analyst, also called a currency researcher or currency strategist, works for a forex brokerage and performs research and analysis in order to write daily market commentary about the forex market and the economic and political issues that affect currency values. These professionals use technical, fundamental and quantitative analysis to inform their opinions and must be able to produce high-quality content very quickly to keep up with the fast pace of the forex market. Both individual and institutional traders use this news and analysis to inform their trading decisions.
An analyst might also provide educational seminars and webinars to help clients and potential clients get more comfortable with forex trading. Analysts also try to establish a media presence in order to become a trusted source of forex information and promote their employers. Thus, there is a large marketing component to being a forex analyst. (To find out how to avoid the mistakes that keep forex traders from succeeding in a treacherous market, see "Top Reasons Forex Traders Fail.")
An analyst should have a bachelor's degree in economics, finance or a similar area. They may also be expected to have at least one year of experience working in the financial markets as a trader and/or analyst and be an active forex trader. Communication and presentation skills are desirable in any job, but are particularly important for an analyst. Analysts should also be well-versed in economics, international finance and international politics.
2. Forex Account Manager/Professional Trader/Institutional Trader
If you have been consistently successful trading forex on your own, you may have what it takes to become a professional forex trader. Currency mutual funds and hedge funds that deal in forex trading need account managers and professional forex traders to make buy and sell decisions. Institutional investors such as banks, multinational corporations and central banks that need to hedge against foreign currency value fluctuations also hire forex traders. Some account managers even manage individual accounts, making trade decisions and executing trades based on their clients' goals and risk tolerance. (For further insights on currency trading, check out "Top 6 Questions About Currency Trading.")
It's important to note that these positions have very high stakes. Account managers are responsible for large amounts of money, and their professional reputations and those of their employers are reliant on how well they handle those funds. They are expected to meet profit targets while working with an appropriate level of risk. These jobs may require experience with specific trading platforms, work experience in finance and a bachelor's degree in finance, economics or business. Institutional traders may not only need to be effective traders in forex, but also commodities, options, derivatives and other financial instruments.
3. Forex Industry Regulator
Regulators attempt to prevent fraud in the forex industry and can hold multiple roles. Regulatory bodies hire many different types of professionals and have a presence in numerous countries. They also operate in both the public and private sectors. The Commodity Futures Trading Commission (CFTC) is the government forex regulator in the U.S., while the National Futures Association (NFA) sets regulation standards, and screens forex dealer members from the private sector.
The CFTC hires attorneys, auditors, economists, futures trading specialists/investigators and management professionals. Auditors ensure compliance with CFTC regulations and must have at least a bachelor's degree in accounting, though a master's and Certified Public Accountant (CPA) designation are preferred. Economists analyze the economic impacts of CFTC rules and must have at least a bachelor's degree in economics. Futures trading specialists/investigators perform oversight and investigate alleged fraud, market manipulation and trade practice violations, and are subject to work experience and educational requirements that vary by position.
CFTC jobs are located in Washington, DC, Chicago, Kansas City and New York and require U.S. citizenship and a background check. The CFTC also provides consumer education and fraud alerts to the public. Since the CFTC oversees the entire commodity futures and options markets in the U.S., it is necessary to have an understanding of not just forex, but all aspects of these markets.
The NFA is similar to the CFTC and also oversees the broader futures and commodities markets, but instead of being a government agency, it is a private-sector self-regulatory organization authorized by Congress. Its mission is to maintain market integrity, fight fraud and abuse and resolve disputes through arbitration. It also protects and educates investors and enables them to research brokers (including forex brokers) online. Most NFA jobs are located in New York, but some are in Chicago.
Internationally, a regulator could work for any of the following agencies:
- Financial Services Authority (FSA) in the U.K.
- Financial Services Agency (FSA) in Japan
- Securities and Futures Commission (SFC) in Hong Kong
- Australian Securities and Investments Commission (ASIC) in Australia
4. Forex Exchange Operations, Trade Audit Associate and Exchange Operations Manager
Forex brokerages need individuals to service accounts, and they offer a number of positions that are basically high-level customer service positions requiring FX knowledge. These positions can lead to more advanced forex jobs.
The job of an exchange operations associate includes processing new customer accounts; verifying customer identities as required by federal regulations; processing customer withdrawals, transfers and deposits; and providing customer service. The job usually requires a bachelor's degree in finance, accounting or business, problem-solving and analytical skills and an understanding of financial markets and instruments, especially forex. It may also require previous brokerage experience. (For further insights on the differences between a career as a broker and trader, see "Broker or Trader: Which Career Is Right for You?")
A related position is a trade audit associate, which involves working with customers to resolve trade-related disputes. Trade audit associates must be good with people, able to work quickly and think on their feet to solve problems. Unsurprisingly, they must also thoroughly understand forex trading and the company's trading platform in order to help customers.
An exchange operations manager has more experience and greater responsibilities than an exchange operations associate. These professionals execute, fund, settle and reconcile forex transactions. The job may require familiarity with forex-related software, such as the widely-used Society for Worldwide Interbank Financial Telecommunication (SWIFT) system. (To learn more about the global interconnection of U.S. payment systems that make commercial and financial transfers possible, check out "Inside National Payment Systems.")
5. Forex Software Developer
Software developers may not be required to have financial, trading or forex knowledge to work for a forex brokerage, but knowledge in this area will be a major advantage. If you have forex trading experience, chances are you'll have a much better idea of what customers are looking for in forex software. Software quality is a major differentiator for forex brokerages and a key to the company's success.
For instance, a brokerage faces serious problems if its clients can't execute trades when they want or trades are not executed on time because the software doesn't work properly. A brokerage also needs to attract customers with unique software features and practice trade platforms. (To learn more about forex trading software, see "Forex Automation Software for Hands-Free Trading.")
Other positions in forex that require computer-driven experience include user-experience designers, web developers, network and systems administrators and support technicians.
Additional Job Options in Forex
In addition to the specialized, highly technical careers described above, forex companies need to fill typical human resources and accounting positions. If you're interested in a career in forex, but don't yet have the required background or experience for a technical position, consider getting your feet wet in a general business position and for college undergraduates, many forex companies offer internships.