In 2016, the global forex (FX) market has an estimated turnover of nearly $5.2 trillion, making it the most liquid financial market in the world, writes FXTM’s Ben Lovell-Viggers. But who are the people facilitating those trades? What do they get up to on a day-to-day basis? Read on to find out…
Deal or no deal?
The first thing to understand is that a dealer is not a trader. Traders place orders to trade, read the market and call the shots, but it is dealers who facilitate those trades, acting as middlemen between investors and the market.
All large financial institutes, banks and brokers have a Dealing department. It’s a fast-paced world charged with ensuring their client’s orders are executed quickly and accurately. The dealers are also responsible for managing the trading environment, securing liquidity and ensuring traders are aware of any pending situations that could result in market volatility.
A day in the life
A dealer’s day starts as early as possible. This is a necessity as the currency market operates 24 hours a day. Before beginning work, dealers will usually review any overnight price fluctuations, as well as the most up-to-date economic releases and the news. Despite the proliferation of technology, keeping on top of current affairs remains a fundamental aspect of dealing forex. The markets can be influenced by all manner of factors, from changes in interest rates to natural disasters.
For some, dealing forex conjures up images of bustling dealing rooms, full of noise and chaos. In fact, technological advancements mean that many processes are now fully automated. That doesn’t mean, however, that the pressure is any less intense.
During the working day, forex dealers receive and review an enormous amount of data. This constant flow of information is usually provided by global news agencies such as Thomson Reuters, and allows dealers to identify trends or patterns in the market. Staying alert throughout the day is of utmost importance – dealers need to be able to react quickly to even comparatively minor changes in the market to ensure an optimum trading environment.
Session and performance reviews usually take place at the end of the day. During this time, dealers will attempt to identify trends or patterns that could influence traders’ future strategies.
Tricks of the trade
Dealing forex is a high-stakes, high-pressure occupation. Dealers must remain calm and focused when working with vast sums of money, as well as analysing, anticipating and reacting to market movement in a matter of seconds. As a result, they often take steps to ensure that they are working as quickly and accurately as possible:
- One of the best ways to ensure that your decision-making abilities are up to scratch. Many dealers start their day with a session of vigorous exercise to maximise blood flow to the brain and maintain alertness.
- Proper nutrition is vital to maintaining energy levels throughout the day, so you’ll rarely find a dealer who skips breakfast.
- Analysing and reacting to the market is second nature to successful dealers. Adhering to a strict routine ensures that decision-making becomes almost instinctive – it also allows dealers to make the most efficient use of their time.
- Fatigue builds up when the body and mind aren’t allowed to recover from a hard day’s work. This leads to slow reactions and an impaired decision-making process. Therefore, dealers make an effort to switch off after work – they understand the importance of maintaining full cognitive function more than most.
Not everyone is cut out to be a forex dealer. However, everyone can trade forex, using their own capital to fund currency trades. Forex traders, alternatively known as ‘private’ or ‘retail’ traders, employ the services of a brokerage to facilitate the buying and selling of currency. Brokers come in many forms, but some of the most popular operate online platforms that allow users to trade forex swiftly and securely.