A foreign exchange, or FX, trader applies financial acumen and securities markets knowledge to buy, hold or sell assets on behalf of a financial institution. An FX trader has a flexible work schedule as currencies markets are continuously open from Monday through Friday. A currency trader typically holds a Bachelor's degree in business.
An FX trader may invest in securities markets on behalf of a client or his employer. An FX trader who buys, holds or sells currencies with corporate funds is referred to as a proprietary trader. For example, a foreign exchange trader may receive £65 million in trading cash from an investment bank at the beginning of the year. At the end of the year, the portfolio grows to £74 million. The firm records £9 million in its income statement and the trader receives a bonus.
Education and Training
Foreign exchange trading does not require any formal training or education. However, employers often ask FX traders to have, at a minimum, a four-year college degree in business, finance, accounting or economics. A trader with a liberal arts background is not uncommon in the field, although he/she receives practical training before performing his/her duties. An FX trader with significant managerial responsibilities often may have an advanced degree, such as a Master's, in economics or math.
Salary levels for FX traders generally depend on performance, as cash and stock bonuses are substantial parts of their remuneration. Other factors that may affect salary levels include the company's size, the industry and employee seniority or academic training. The U.S. Labor Department reports that median annual wages of FX traders were £44,642 in 2008, excluding stock and cash bonuses, with the middle half of the occupation earning from £26,312 to £79,475.
A foreign exchange trader's career growth opportunities typically depend on the economy, corporate staffing needs, developments on securities markets and the company's size. A novice FX trader may improve chances of promotion by enrolling in a university's graduate programme in economics and receiving a Master's degree. A competent and productive foreign exchange trader may move to a senior role after three to five years, start his own FX fund or trade on behalf of other clients as independent trader.
An FX trader has a typical 8 a.m. to 5 p.m. work schedule, but his/her schedule usually depends on his shift. This is due to the fact that currency markets are generally open from Sunday nights to Friday afternoons. For example, a New York-based trader who wants to buy and sell Australian dollars and Japanese yen may work at night and trade when Asian markets are open.