If you're interested in stock trading and a potentially lucrative career, consider becoming a forex broker. Understanding a forex broker's duties and required qualifications can help prepare you for a career in this field. In this article, we explain the role of a forex broker, explain how to become a forex broker, list the required skills, salary and job outlook for this position.
Related: 12 High-Paying Trade Jobs
What is a forex broker?
Also known as a “foreign exchange broker” or a “retail forex broker,” a forex broker connects traders with a network of banks to help the former buy and sell foreign currencies. They retrieve money from these intrabanks—or banks within one network—and offer their clients the best prices possible. Forex brokers can help people trade independently or form money management funds.
Related: How To Get Into a Trade
How to become a forex broker
As a forex broker, you have the option to work on your own or as part of a brokerage firm. If you decide to work for a company, you need to meet their specific forex broker requirements. Use these steps to become a forex broker at a brokerage firm:
1. Learn about the foreign exchange market
Before pursuing this as a career, study the foreign exchange market and currency trading. It's also important to understand price charts and trading signals, know how to evaluate potential risks and rewards and how to perform a fundamental analysis.
Read web articles and books to obtain a full understanding of the workings and players in the forex market. In addition, understand the sub-disciplines that come into play with currency trading, modern forex jargon and pricing and order conventions. As a forex broker, it's important to know this information to help traders decide on and broker their various transactions.
Read more: How To Become a Forex Trader
2. Understand the role of a forex broker
Spend time researching what a forex broker does in today's trading environment and what you can ultimately expect upon entering this profession.
Consider talking to practicing or retired forex brokers to get their input and knowledge regarding the job's requirements and their daily duties in this role. You can also join online forex discussion groups to get in contact with established brokers. As you receive input from other forex brokers, keep in mind that the role has evolved given the dependence on information technology.
3. Consider earning a degree
While you don't necessarily need a degree to pursue a career as a forex broker, it can certainly help. Consider getting a college degree in business, finance or economics to increase your chances of getting hired. It also helps if you have experience selling financial products. Here are degrees that can help you prepare for a career as a forex trader:
- Business Administration
- Investment management
- Computer Science
- Applied Mathematics
4. Earn a professional certification
Typically, you're required to receive a certification by passing the National Association of Securities Dealers Series three test. Spend time preparing for this test. Then, once you're sponsored by a licensed brokerage firm, take the actual test and pass it to continue pursuing this career.
5. Pursue a job
Consider if you want to work for a large financial institution or a smaller retail brokerage firm. Keep in mind that while a large financial institution may provide you with greater job stability, you may have to start at a lower-level position. On the other hand, if you seek employment at a smaller retail brokerage firm, you may have more responsibility to start, but not have the stability you'd see with a large financial institution.
Keep in mind that since some forex brokerages have merged with futures brokerages, you may need additional licenses or certifications for the futures industry to get hired by this type of hybrid firm.
What does a forex broker do?
A forex broker has a variety of duties that ultimately help their clients find success. Here are some of a forex broker's duties:
- Opening and closing new leads
- Communicating with investors in person and over the phone
- Contacting prospects and working with existing clients
- Recommending competitive foreign exchange rates to clients
- Developing relationships with clients
- Maintaining accurate records
- Selling products and services
- Making cold calls
Generating leads through multiple sources
Forex broker skills
Forex brokers need a variety of skills to perform their job successfully. The more you grow your skill set, the better you can complete your duties and find success as a forex broker. Here are some of the skills you need as a forex broker:
- Communication and interpersonal skills: Forex brokers use their communication and interpersonal skills to interact with current and prospective clients and investors. This skill helps them have effective communication with these parties and ensures they're able to help their clients.
- Analytical skills: Forex brokers need analytical skills to assess data quickly. They also use their analytical skills to find a situation where a forex transaction has the chance to make a profit.
Mathematical skills: As a forex broker, you need strong mathematical skills when working with currency and various numbers. For example, your mathematical skills help you determine potential profits and losses and help you decide how much to invest.
Read more: 16 Trader Skills To Develop for Success
Salary and job outlook
While the U.S. Bureau of Labor Statistics (BLS) doesn't report salary or job outlook data for forex brokers, it does have data for securities, commodities and financial services sales agents. The BLS reports a median pay of $62,270 per year for these careers as of 2019.
In comparison, financial analysts made a median pay of $81,590 per year in 2019. Keep in mind that your salary as a forex broker may differ based on your employer, your skill or experience level and your geographic location.
In terms of job outlook, the BLS reports a projected 4% employment growth for securities, commodities and financial services sales agents. It reports an expected 5% employment growth for financial analysts, by comparison.