Becoming a professional forex trader

Today, it is not necessary to be a professional forex trader to make money from forex speculation, since retail platforms online are available even to small-scale hobby traders. With that said, many successful hobby traders will eventually start wondering: should I keep this as a hobby or should I become a professional forex trader?

In this article, we will take a look at a few points that can be good to keep in mind for a hobby trader who is considering making the leap into professional forex trading.

Regulation

In many countries, a different set of rules apply to professional forex traders. This is true even if you are only risking your own capital and not accepting money from anyone else to invest.

Exactly what is required to be classified as a professional forex trader in the eyes of the law vary from one jurisdiction to the next, so make sure you know and understand the laws that pertain to your situation.

Exactly how a trader is expected to prove that they are (or aren´t) a professional forex trader will also vary.

If you are interested in being re-classified as a professional trader, contact your forex broker for more information. Depending on the jurisdiction, being re-classified as a professional trader may for instance give you access to bigger leverage, but you will also lose any legal protection that has been put in place to protect non-professional traders. Typically, mandatory Negative Account Balance Protection only apply to non-professional traders.

Professional trading accounts

Some brokers have special trading accounts available for traders that have be classified as professional traders. In addition to adhering to applicable laws and regulations for professional traders, these accounts will frequently also offer special perks tailor-made for the pros.

Examples of requirements that you may need to fulfil to get a professional forex trading account:

• The account balance must be over a certain limit.
• You must trade above a certain volume each month.
• For legal reasons, a broker may also be required to take relevant education, certifications and trading experience into account.

Exactly what is required to obtain a professional trading account and how it may benefit you will vary between different brokers, so it is a good idea to compare them before making a decision. The broker that was ideal for you as a non-professional trader might not be the optimal choice for your as you transition into being a professional forex trader.

Examples of benefits that MAY come with a professional forex trading account

• The broker can be legally permitted to offer you more leverage and/or higher margins.
• The broker can be legally permitted to remove your Negative Account Balance Protection. For some forex traders, this is something positive, since it gives them more control over their leveraged trading / margin trading.
• The broker may decide to offer you tighter spreads for certain currency pairs, or lower certain fees/costs. Some brokers are more eager than others to please their professional high-volume traders in this manner, so it can be beneficial to shop around.
• A Personal Account Manager may be assigned to you.
• You may be given priority access to the customer support.
• The upper limits for deposits and withdrawals may be increased.
• You may get access to more advanced tools, e.g. more complex tools for technical analysis.
• The broker can grant you access to educational material specially developed for experienced, professional traders.
• You may be invited to special events for professional traders.

Some of the benefits available to you in a professional trading account may be the same as the ones you would get if you had a VIP Account with the broker as a hobby (non-professional) trader. The law tends to makes a big distinction between professional and non-professional traders, while the brokers are more focused on trading volume.

Trading platforms

Below, we will take a look at four trading platforms that are used by both professional and non-professional forex traders. None of them are exclusively for professional forex traders, so you can try them out without first having to prove that you are a professional trader.

MetaTrader 4 (MT4)

MetaTrader 4 (MT4) is a large and well-known trading platform chiefly, but not exclusively, utilized for forex speculation. It is an independent third-party platform and you will have a wide variety of brokers to chose from if you want to use the MT4.

• It can be downloaded and installed on the computer.
• It can be used directly in the web browser window.
• Mobile apps are available for both iOS and Android.

The MT4 platform comes with very strong support for technical analysis, including over 2,000 different indicators. The charts can be displayed using 9 different time frames.

cTrader

This is another example of a big, independent trading platform and many different brokers around the world will give you access to cTrader.

• It can be downloaded and installed on the computer.
• It can be used directly in the web browser window.
• Mobile apps are available for both iOS and Android.

When using cTrader, you can utilize market orders, limit orders, stop orders and stop limit orders as a part of your risk management strategy.

Just like the MT4, the cTrader comes with really powerful tools for technical analysis, a fact appreciated by many professional forex traders.

cTrader will provide you with APIs (Application Programming Interfaces), making it possible for your to receive data and place orders using different programming languages. The cTrader Automate allows you to create cBots for automated trading. FIX Protocol and cTrader Open API are other examples of notable APIs on this platform. The cTrader Open API is used to develop automated trading strategies and implement third-party services.

ZuluTrade

The ZuluTrade platform is known for its very strong support for automated trading and social trading, including copy trading. You can mirror other traders, but also become a trader that others can mirror.

NinjaTrader

The NinjaTrader platform has received a lot of praise for its Strategy Builder feature and for permitting an unusually high degree of customization.

A few tips for those who are considering having forex trading as their profession

Set realistic goals and don´t neglect to follow-up

Set clear and realistic goals for your professional forex trading. Preferably, break down the larger goals into clear, smaller steps that will help you move in the right direction. There are many things that are possible to control, so make sure you have a plan for the things that you do control, e.g. how much time you spend educating yourself in the trading field each week and how much you save in a separate account each month to help you through difficult stretches in the future.

Follow-up regularly to make sure you are staying on track, but also also remember that it is common for a forex trader´s profits to vary from month to month.

Test run strategies using play-money in a demo account

Before implementing a trading strategy using real money, test run it with play-money in a demo account to see how it works over time.

A strategy working well in a demo account using historical data is never any guarantee that it will work fine in the future too, but a test run can help you discover strengths and weaknesses with the strategy and give you the opportunity to adjust and fine tune before placing any real money on the line.

Learn about technical analysis and fundamental analysis

Many professional forex trader are utilizing technical analysis to help with their decision making. In essence, they are analysing historical market data in order in an effort to better foresee the future and use that to their advantage. For a forex trader, technical analysis has a lot to do with spotting and understanding market trends. There are many platforms for forex trading that come with built-in tools for technical analysis.

Fundamental analysis is more about looking at the big picture and identify conditions and changes that can impact currency exchange rates. Instead of focusing solely on historical market data, the fundamental analyst will look at factors such as news events, political policies and a nation´s economy (BNP, unemployment data, trade balance, relevant commodity prices, etc). Fundamental analysis is more common among forex trader who open positions for longer periods of time than the daytraders.

This is just a short and simplified glance at technical analysis and fundamental analysis. If you intend to become a professional trader, it would be a good idea to study both fields deeper to understand how they can benefit you and what drives the decisions of other actors on the forex market.

Learn more about the possibilities, limitations and risks of automated trading

Each trading day, automated trading is moving enormous volumes on the forex market and has a major impact on currency exchange rates. Understanding these dynamics and how automated trading works is important for forex traders.

You may also want to look into how automated trading could benefit you. You do not need to be working for a big institutional investor to utilize automated trading. Today, it is available even for small-scale traders – both hobby traders and small-scale professional traders.

Hire a professional analyse your trade history

It can be difficult to really see our selves objectively. Sometimes, we need someone else to shine a light on our strengths and weaknesses to understand where there is room for improvement and how to move along.

If you have utilized a certain forex trading strategy for a while and have the data saves (as you ought to) it can be useful to hire a professional to analyse it and give you their take on it. Just like you may benefit from having a personal trainer at the gym, you can benefit from hiring a personal trainer in the forex business.

Chose with care, though, because there is a lot of trash out there. There are for instance self-proclaimed experts in the field that will promise you an individual analysis but actually bring you scarcely more than something auto-generated sprinkled with a few clichés.