FX Traders the New Kings of the Street?

mod (Andy) note: "Blast from the past - Best of Eddie" - This one is originally from February 2010. If there's an old post from Eddie you'd like to see up again shoot me a message.

Matthew Lynn had an interesting column the other day about financial services career advice for those about to graduate college or those seeking a career change. He says hedge funds, derivatives, and private equity are out; and that currency trading is the place to make your fortune over the next decade.


The sovereign-debt crisis, the demise of the dollar and the creation of new reserve currencies all mean that the great financial reputations and fortunes will be made in foreign exchange in the coming few years.

In any decade, one sector of the financial markets is usually dominant. There is one corner of the financial universe where so much new stuff is happening, and it is of such importance to the rest of the world, that it is far easier for a young, ambitious person to make their mark than anywhere else.

I would say that roughly 20% of my business was currency trading in the late 90's, and that it was lucrative (for the most part -- one of my biggest losses was a D-Mark trade that went awry). I have to agree that if a young person were able to master the currency markets today, they'd be sitting pretty in a few years.

Lynn cites the sovereign debt crisis and the long term decline of the dollar as two principal reasons to consider currency trading as a career. Again, I have to agree. It seems the currency markets are setting themselves up in the same way the depressed commodities markets of the late 90's were primed for an explosion.

This might just be great career advice, guys.

 
LLcoolJ:
great article

i am looking to go into FI trading myself

one question

i am set to graduate in 2014 (i'll be 24, it's complicated but i don't think i'm "too old" + i'll have first class honors), am i going to "miss the ship" ??

Well, you can board the ship at any time. Begin with a relative small fortune (say, 5000$?).

 
LLcoolJ:
great article

i am looking to go into FI trading myself

one question

i am set to graduate in 2014 (i'll be 24, it's complicated but i don't think i'm "too old" + i'll have first class honors), am i going to "miss the ship" ??

Are you being serious kid??? There is never too old and 24 is young !!
"The higher up the mountain, the more treacherous the path" -Frank Underwood
 

FX is the most liquid and arguably most volatile asset class in the financial world... It's no wonder that whoever masters FX will bring in the big bucks...

But how is a young guy fresh out of college be expected to understand how FX ties in with interest rates, equities, credit derivatives, etc. all at once?

I think the asset class will be more attractive in several years time, perhaps after bigger names/funds go after FX more exclusively in their trading/investment strategies. What do you all think?

 
Best Response

The author of that article is a moron; so many things wrong with his article, I don't know where to begin.

  • the dollar has been in long term decline for a LONG time. It is also very unlikely to lose reserve status - reasons are much more complicated but suffice to say, it requires much more than a throwaway.

-he makes no mention of what innovation he expects to see in the FX markets. Other than the increase of retail investors, nothing he mentions is "innovative" or disruptive enough to change the FX game.

-"hedge funds" and "derivatives" for the 2000s are not an asset class (you could say "credit" for 2000s but like I said, the author is an idiot). If you want to trade FX successfully, you better be at a hedge fund or a bank simply for the information flow. Joe Blow sitting at home is going to get blown out if he tries to speculate in spot FX/options.

  • yeah, there is likely to be volatility in the FX markets going forward, but nothing really out of the ordinary. The main likely upcoming scenario (which he didn't mention) is the dissolution of the Euro but that's unlikely to cause any long-term structural volatility.

Good find, but the author's acting like he's stumbled across some big secret. Nothing new here... FX trading is & has been the cash cow of my bank. With the right information flow and strategy, fortunes can be made. Agree with above poster, that odd lot theory extends across asset classes - joe blow trying to time movements will only lose in the long run.

Follow me on insta @FinancialDemigod
 

I've always been interested in FX trading, but given the volatility and24/7 nature of the market never put any money into it. Aside from that route, how would you suggest one go about developing the foundational understanding necessary to secure an analyst/associate position in FX S&T?

I know that there are a number of sites that allow practice/trial accounts, but the one I did (I think through forex.com) expired after a month and I started getting harassed to open a real account. Anyone have sites that are better, or books that would be a good starting point etc?

Thanks.

 

FX (and to some extent, commodities) are more interesting to me than equities. But 'master the fx markets and you can make a fortune' sounds no less daunting than 'run a 9.8s 100m and you have a shot at making the Olympic Team.' That said, I am still learning the currency markets even if I'll never be the next Soros.

 

Currencies hardly move more than 1% daily, how come they are volatile.

You killed the Greece spread goes up, spread goes down, from Wall Street they all play like a freak, Goldman Sachs 'o beat.
 

umm..the currency markets lately have no been doing shit. I trade every day.

To all of those who want to make money in currency trading..stop wasting time on small time frames, if you use stop losses, make them BIG because you will get stopped out and each trade should be .5-1% of your account. Trade Daily and weekly charts and do the opposite of what retail is doing (oanda, fxcm and a few others provide a basic COT list that is updated throughout the day)

Now is a good time to learn, IMO because they (currencys) aren't doing shit.

alpha currency trader wanna-be
 

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