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With more than $1.8 trillion in currencies traded every day, the Forex is the largest market in the world. Becoming a Forex broker is a challenging undertaking that not every one is up to, but the rewards of success can include the opportunity to make a great salary, achieve helpful connections and gain an insider understanding of the Forex that can greatly assist you in trading independently or one day forming a money management fund.
How to Become a Forex Broker
Understand the Foreign Exchange Market. Read every web article and book you can to make sure you fully comprehend the workings, mechanisms and the players in the Forex market. Obtain a strong command of the various sub-disciplines that play a role in currency trading, such as macro-economics and technical analysis. Be fully checked out in modern Forex nomenclature and jargon, pricing and order conventions and all the basics of what you can expect to encounter when helping traders decide on and broker their transactions.
Get a feel for what a Forex broker does in today’s trading environment. Find practicing or retired Forex brokers to talk to about the requirements of the job and the day-to-day routines. If you don’t know or can’t find any in the real world, online Forex discussion groups are often an excellent venue for either locating them or finding people who can help you locate them. Be aware that with the advance of technology, the job of today’s Forex broker is considerably more preoccupied with information technology than it was even 10 years ago. Many retail traders trade Forex almost entirely online, without the input of a broker. In this case, brokers are often relegated to ensuring the client’s software platforms are operating soundly, their orders are being processed expeditiously and the firm’s own pricing algorithms are maintaining an appropriate bid/ask spread, upon which the company depends for revenue.
Get your professional certification. Forex brokers are grouped in with futures and commodity brokers and are typically required to pass the National Association of Securities Dealers Series 3 test. You can find and order comprehensive preparatory material for this test online but to take the actual test you’ll have to be sponsored by a licensed futures brokerage firm. There are no explicit educational requirements for being a Forex broker, but a college degree in business or economics would enhance your chances of getting hired.
Pursue a job. Decide on whether you would like to try to get hired by a large financial institution, in which case you’ll probably have more stability but will have to start out lower on the employment ladder, or if you’d like to join a smaller retail brokerage firm in which you might have more responsibility to start off with, but don’t have the presumed stability of a large institution. Be aware that some Forex brokerages have merged with futures brokerages and that to become a broker for one of these hybrid firms you’d probably have to accumulate additional licenses or certifications specific to the futures industry, under the purview of the Commodity Futures Trading Commission. Also, be sure to stay away from shady bucket-shop style Forex firms that are not transparent about their ownership or the nature of their operations and promise their clients unrealistically high returns or non-existent safety guarantees.
If you don’t want to become an official Forex broker, you could still become an introducing broker. Many Forex companies offer programs for traders, trading service providers and other people independently involved in the Forex business to earn commissions by referring clients to them.