Forex trading is a highly profitable business for a number of reasons. Forex trading requires expert knowledge in the financial markets and the basic understanding of the market in which you are trading. You can earn hundreds of dollars or thousands of dollars per day by trading currencies. When you want to make money trading currencies you should get to know the markets and market forces in general. You also need to pay attention to tax implications, currency rates and other variables that come into play in your forex trading. All this becomes easier by a distinguish forex trader.
The types of forex traders are as follows:
Portfolio traders are the generalists of the currency trading. They deal in a number of currencies and try to make a profit through a number of different methods.
For example, they may buy a company’s stock and earn trading in the currency and gain in the stock market. Others may try to make money trading bonds and currencies. Portfolio traders try to make the most of all possible market situations.
A broker is a person who is paid a commission to match buyers and sellers of a specific currency pair and to help carry out trades. A broker can only be paid a commission for buying or selling when he is the person selling the currency.
For example, a Canadian broker in the US may be paid a commission on a Canadian dollar/US dollar transaction. A broker is only paid the commission when a trade is made, not when the trade is cancelled. However, a broker can charge different commissions according to how much work he does.
Position traders focus on a specific currency, such as the euro. The whole reason for them to trade in a specific currency is that it is usually trading at a much greater rate than others.
For example, if you choose to trade the pound you will likely be able to get very good rates, whereas if you want to trade the euro you are likely to be charged more. The effect is that you can trade in a currency with better rates than most others. Therefore, you can make money trading currencies that others cannot.
Price traders are the most adventurous of the forex traders. Their strategy is to buy a currency at a high price and sell a low one. Price traders can earn great money if they know how to predict the future rate.
This is a very tough strategy to pull off, but it does mean that a currency is likely to change prices significantly. For getting more knowledge about other brokers, you can go through the veracity markets review.
Generally speaking, each of the traders in the preceding section can profit from the different types of currency trades. Thus, a portfolio trader may make a lot of money as long as they do not sell the currency immediately. A broker will make a lot of money trading in a currency with a large market. An important point to remember when trading currencies is that you need to know your currency and the market in which you are trading.