Currency Trader

by Stephan Smith on December 10, 2010

I’m sure you’ve heard of a stock trader or bond trader, but have you heard of currency trader? Do you know what a currency trader is? If you do, then you have knowledge about something that a great majority of people don’t have knowledge about. Whenever I mention that I am a currency trader, I usually get bewildered looks. Looks of pure confusion (most of the time). Are you stricken with pure confusion and bewilderment when you hear the term, ‘currency trader’? If you do, don’t worry about it, just keep reading.

Something that I find funny is that a lot of people are currency traders and don’t even know it. Are you are a world traveler, one who visits various countries around world? Then there is a chance that you’ve participated in similar activities that currency traders regularly participate in. Hey, you may be a currency trader and not even know it.

If you don’t know what a currency trader is, then allow me the opportunity to explain. Hopefully, after reading this page, you will be part of the relatively small group of people who have an understanding as to what a currency trader is and what one does.

What is a Currency Trader

A currency trader, also known as a foreign exchange trader and forex trader, is a person who participates currency trading, which is the buying and selling various currency future contracts or physical currency banknotes on the foreign exchange market.

The primary objective of a currency trader is to make a profit based on shifting currency price valuations. However, sometimes currency traders just execute transactions to aid in buy and selling of goods and services internationally (international trade) and isn’t primarily trying to make a profit on the transaction itself.

A currency trader who execute trades electronically, primarily does so to make profit. A currency trader who performs electronic trades would speculate on which currencies will become more valuable and which currencies will become less valuable relative to other currencies over time, based on technical analysis and/or fundamental analysis.

Currency trader performing electronic trades

Currency trader performing electronic trades.

Once a currency trader has identified a currency whose value will increase and/or decrease over time, the currency trader will use his’ or her’s funds to buy (long) the currency that will increase in value and sell (short) the currency whose value will increase at a slower pace, stay stagnate or devalue over time. As the currency that was brought becomes more valuable against the currency that was sold, the currency trader makes a profit.

The opposite can also occur. If the currency that was brought by a currency trader starts losing value against the currency that was sold, the currency trader would lose money or experience a deficit. Whenever an electronic transaction takes place, usually no currency banknotes are purchased and sold, but rather currency future contracts. Those contracts are maintained by the broker used by the currency trader to execute the transaction and usually are never seen by the currency trader.

If a currency trader wishes to buy and sell currency banknotes, then one can go to a currency exchange counter (also known as an currency exchange desk) to accomplish physical currency trades. As I mentioned earlier, currency traders who perform currency exchanges with physical banknotes, usually do so to help them do business internationally.

Currency Exchange Counter

Here are currency traders exchanging their currencies for other types of currencies. If you've done this, you too are a currency trader.

If you sell a product domestically and you want to start selling your product in a country that uses another currency, then you would have to exchange your currency banknotes for the currency banknotes that is used in the country you want to do business in. That is accomplished by using a currency exchange desk.

Now that you have a better understanding of what a currency trader is and it sounds interesting to you, you should look into electronic currency trading. Its a great was to tap into the multi trillion dollar market and earn profits. If you sell goods and services and you are considering selling your goods and services to a country that uses a different currency, you should research an over the counter currency exchange desk.

To contact me for questions, comments, adverting or other business related inquiries - please visit my contact page.

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