Currency Trader  What They Do

Just the Facts


Insider Info

dotCurrency traders deal in the ultimate commodity -- cash. They have a quick eye for fluctuating exchange rates and usually love stress.

"I thrive on the stress," says currency trader Karn Horcher. "There's nothing better than having a phone in each hand and yelling to the other side of the room. That's the greatest feeling in the world. I love the adrenaline that trading creates."

dotA currency trader buys and sells currency (money). One hour they might be changing American dollars into Japanese yen; later in the day they might be working with British pounds or Swiss francs.

Different nations use different currencies, or units of money. Americans use U.S. dollars, while people in France use the euro. Each currency has a different value -- American dollars are worth one dollar in America and a little more in Canada.

dotPeople trade currencies for many reasons. Companies and individuals often have to buy the currency of the country they're doing business with in order to buy products or services.

Some people even "play" the foreign exchange market -- buying and selling currencies to make a profit.

A currency trader is the stockbroker of the money market.

dotThe demand for foreign exchange from international corporations, private individuals, the government, tourists and banks creates an enormous currency market. And no one knows this better than the traders themselves.

"It's the best market [to trade on] because it's so big and liquid, the amounts are so large," says Horcher. "I used to trade about $20 or $30 million at a time. That was the usual amount. It wasn't unusual for me to trade $200 million in a day."

dotThe foreign exchange market is huge, but currency traders have specialized jobs:

  • Spot traders trade for the immediate foreign exchange market, the largest and most active market
  • Forward traders buy and sell currencies for future delivery
  • Currency futures and options traders trade on exchanges, but with the option that the purchaser doesn't have to buy or sell the currency if it's not to their advantage
  • Corporate traders work for a specific corporation, trading currencies for the company
  • Bank sales traders buy and sell currencies for corporate and institutional clients

Some traders specialize in one type of currency -- for example, Scandinavian traders like the Norwegian krone.

dotThis is a demanding, exciting career. If you're interested, remember that you'll have to remain alert and on top of things. "You need a steady nerve," says trader Elliott Dix from Richmond, Virginia. "If you get flustered, this isn't the job for you. You have to be able to do three things at once."

dotCurrency traders must be aware of what's happening on the world's currency markets. As a result, those on the West Coast often start their mornings quite early -- around 4 a.m. -- in order to stay on top of the market. Expect at least a 50-hour workweek.

Even those in the eastern parts of the country work some pretty unusual hours to cope with time differences between world markets. "I used to get up in the middle of the night to watch the market in Tokyo, where it was lunch time," says Horcher. "It's a great job if you don't mind being up at 3 a.m. and on the phone."

dotWhile there are no physical requirements, currency traders must be able to cope with the long, unusual hours and high levels of stress.

"There's a high degree of burnout in this job," says veteran trader John Bumister.

"The stress level is very high. You have to be able to cope with that. There are no physical requirements, but you have to be quick and outgoing. When you're dealing with a currency, the rate will move on you 15 seconds later. You don't see a lot of guys in forex [foreign exchange] who are over 40."

dotTraders also have to be aware of current events. World affairs can have a huge impact on the value of currency.

"I was in the office late once, serving our West Coast customers," recalls Dix. "I had these two computers, one of which had the news on it. I was in the office when Desert Storm started. All of a sudden, the market started gyrating. It's always fascinated me to see how people react to things in different ways. Exchange rates reflect those reactions."

At a Glance

Deal in cold hard cash on world markets

  • You have to be able to multi-task
  • Expect to work 50-hour weeks in this business
  • You'll likely need a business degree and possibly an MBA